The Gold futures market has taken advantage of the weakness of the U.S. Dollar this past week. Nearby Gold futures have has rallied over $30.00 per ounce since June 26th. In my opinion, there are several reasons for this: FOMC Chairman Ben Bernanke’s acknowledgement of a very weak housing market sector, the threat of inflation, and the increased amount of physical Gold being purchased world-wide (especially in the middle-east), just to name a few.
The recent spate of oil refinery problems worldwide has also helped the Gold market maintain its Bull run as well as pushing gas prices up at the pump. In most scenarios Gold and Crude Oil are considered “anti-Dollar” and tend to move in the same direction. I am still of the opinion there is plenty of upside in the Gold market. However the volatility of this market warrants caution and I recommend trading swing numbers with stop loss orders or hedged spreads. I have clients long Bullish Call spreads presently.
If in fact we continue to rally I believe we will encounter lots of resistance between the $685.00 and $700.00 per ounce area basis the August ’07 Gold futures contract. The market has failed three separate times to climb above $700.00. This latest run up has happened without the “hot” headline geo-political news that has coincided with previous rallies. Last week the Navy acknowledged sending a third Aircraft Carrier (USS Enterprise) to the Persian Gulf, which certainly bears watching, however.
When trading Gold always do your homework and find the system and platform that suits your trading style and budget. There is a saying in the industry “Bulls make money…
Bears make money…and Pigs get slaughtered” — in other words when a profit presents itself, be prepared to protect it!
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There is risk of loss in futures and futures options trading.
Manduca Trading, LLC
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