Futures Outlook: Is Now the Time to Buy Gold?

Lindsay Hall  |

It's time to come back to Gold in our discussions of Futures and Commodities. The very significant metals market failure that we've witnessed over the last five months may offer a reprieve.


When discussing Gold, it is important to realize the vast market for those that buy and hold as well as those that are truly just speculators. "Gold bugs" will always be buying and keeping the bullion that they crave, so there will always be buyers in this market. Speculators will take advantage of the moves in either direction. In addition, you should also keep in mind the relationships that Gold has with the U.S. Dollar.

On the Daily chart, you can see that Gold tested below the 1200 level and has started a rebound. The 1250 territory will be important to watch. If we cannot rest above it in a stable manner, then we may see a little bit of additional failure. However, as I look at the trendline on the daily chart, it seems that we are starting to break the latest downward trend and that is positive if you want to add to or begin positions in gold.

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Your Weekly chart on Gold shows the same potential for initial rebound. We have yet to break the downward trendline per this intermediate chart, but this is definitely something to watch if we can hold at or above 1200/1250. You may be seeing the first steps in a recovery of the failure.

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Now, we come to the Monthly chart which illustrates a small uptick in Gold, pulling up from the test of 1200 to the 1250's. It is important to remember that the type of failure that we've seen in the Gold market is actually healthy. A trend that had lasted as long as Gold's upward trend had, needed a correction to make things right so to speak. This retracement or correction for those of you that like to pay attention to Fibonacci levels tested just below the 38.2% level and is now making an attempt at a small recovery.

I tend to be bullish metals over the long term. I view the next number of days into weeks as a good short term bullish opportunity that might fit nicely into the potential development of what could re-establish what was a longer term bullish trend. It will be important to pay attention to the downside risk still as the upward moves with reflection on the last five months would currently be counter trend. Ultimately, I feel that the massive psychological level of 1000 is the spot to watch if we find additional failure in Gold. It would create a very difficult market space for this metal if it were to fail below 1000. I would personally be looking there at a worst case scenario for any short term bullish scenarios.

In addition, for those of you who are left thinking that you have no idea which way Gold will move, but you think that Gold will move in a large way, we have an option strategy just for you which will allow you to take advantage of a large move in either direction.

If you hold Gold bullion and are looking to add to your position without adding to the physical, consider options to do this, as it will be a lesser capital outlay and still allow a pure play on the metal itself. For those of you that cannot afford to buy bullion in large amounts, Options are a great way to build your Gold portfolio in order to take advantage of the price point action in the market space.

We have strategies that allow you to add the Gold to your portfolio via options spreads with fixed risk and a lower capital outlay than many other investment vehicles for this metal. If you would like to prepare yourself for Gold's next move, then please contact us directly.

For more information or for daily assistance with the Options market on Commodities and Futures, visit www.rmbgroup.com or click here to get started today. Read disclaimers here.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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