For the Ladies – Gold and Cotton

The women I know love clothes and gold and I think both at least at the wholesale level will be going on sale in the very near future. Cotton prices have been dancing the up-sloping trend line for the past 6 months as seen on the chart below. Current prices have July futures higher by 19% off their December lows. As of this post futures are lower by 1.38% in today’s session and challenging the up-sloping white trend line. I am thinking we break the trend line in the coming sessions and at a minimum we see a retracement to the 38.2% Fibonacci level near 88 cents.

For now bulls remain in the driver’s seat but momentum appears to be turning. Export sales are rumored to be light this week so I think some longs are booking profits ahead of that # tomorrow and also we have a a USDA report on Friday. Open interest remains high (highest level since Nov. 13) which leads me to believe if and when we turn if the longs puke that COULD accentuate the move lower.

Cotton Futures:

Cotton Futures chart

Cotton Futures chart

June gold futures failed just shy of the 50 day MA (light blue line) this week and as of this post prices are off by 1.44% today breaking the 200 day MA (red line). In weeks past buying has supported on trade below $1275 but could this time be different? Being I do expect the US dollar to track higher from current trade and there seems to be no concern about inflation at least in the short run I think the path of least resistance will be lower. I anticipate that once $1270 is breached futures make a run at their lows from late 2013 near $1200/ounce.

The fact that the recent South African supply side threats did not spill over and result in any upside spike should be disconcerting for the the gold bulls in my opinion. Violence in the Ukraine which should also be supportive and has not resulted in any bullish action. When what should be a bullish impact and markets do not respond as a trader I think you should take the other side of the trade…this has been my experience.

Gold Futures:

Gold Futures chart

Gold Futures chart

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As always, I’m here to discuss specifics and give guidance. Shoot me an email…Give me a call… you can reach me at: mbradbard@rcmam.com or 312-870-1653

Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.

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