The Bears Have An Edge In Gold

February 12, 2021 11:10 AM
April gold is very close to a tipping point today
The 3rd and 4th quarters of 2021 will likely see gold prices above $2,000
Once we embrace inflation, gold prices will explode
Precious metals trading

Precious metals trading

Every time it looks like a recovery in gold prices is coming, it rolls back over. Let’s face it, this market has been sideways with a slightly downward slope for the past 6 months. So, since my last writing a week ago when I called for a test of the $1,750 level, not much has changed. 

April gold rallied to $1,856.60 and today we’re back around $1,815. The path of least resistance is still down. With lower physical demand from India and a little bounce in the U.S. Dollar, suddenly the chart points down again. April gold is very close to a tipping point today. At the time of this writing, the low of the day is at $1,810.10. A close below $1,810 would be a negative and perhaps encourage additional selling. 

While I do remain bullish in the long term, I also remain cautious. You must trade off of what the charts are saying… not from your heart. The 3rd and 4th quarters of 2021 will likely see gold prices above $2,000. I want and encourage my clients to have long side exposure in metals. Again, there’s just too much money out there and economies around the globe are slowly beginning to open. 

We’re seeing signs of inflation creeping in, regardless of what you may hear on the news. Once we embrace inflation, gold prices will explode. Perhaps all this sideways trading is actually basing a long term bottom…

If you are interested in discussing the potential opportunities in the metals futures, contact me directly

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that R.J. O’Brien believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

About the Author

Frank Cholly has 35 years of commodity industry experience. He spent 20 years on the CBOT trading floor.