Gold futures in the December contract settled last Friday in New York at 1,121 an ounce while currently trading at 1,106 down about $15 this week trading below its 20 and 100 day moving average near a 3 week low as I’m currently sitting on the sidelines as this market remains choppy with poor chart structure.
I still see no reason to own gold currently as the risk/reward is not your favor so look at other markets that are starting to trend such as the silver market which I am currently recommending a short position because the chart structure is outstanding. Gold prices had a significant rally in the month of August bottoming out around 1,080 then rallying to 1,170 which was impressive in my opinion due to short covering and a flight to quality as the stock market has experienced volatility in recent weeks sending money out of stocks and into gold as a safe haven but things have settled down putting short term pressure on gold.
As I’ve talked about in many previous blogs I am a trend follower and I do not like to trade choppy markets because they are extremely difficult in my opinion so avoid this market at the current time and focus on silver.
Trend: Lower
Chart Structure: Poor
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Silver futures in the December contract are trading lower by about $.30 this Friday afternoon in New York currently trading at 14.33 an ounce as I’ve been recommending a short position from around 14.70 and if you took that trade place your stop loss above the 10 day high which currently stands at 14.95 as you’re going to have to be patient as that stop loss will not be lower for quite some time.
The next major level of support is at the contract low around the $14 mark and I do think that’s a possibility that could be retested in next week’s trade as the chart structure is still very solid at the current time. Silver prices settled last Friday at 14.55 while currently at 14.33 down over $.20 for the trading week as prices have been consolidating the recent downdraft in prices over the last three weeks, but the long term and short term trend still remain bearish in my opinion, so continue to play this to the downside while taking advantage of any price rally while maintaining the proper risk management strategy.
Silver futures are trading below their 20 and 100 day moving average closing at 3 week low in today’s trade as the commodity markets still looks bearish in my opinion.
Trend: Lower
Chart Structure: Solid
Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets. Get more of Mike's calls on this Weeks Commodity Markets
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