From the May 2013 issue of Futures Magazine • Subscribe!

10 pearls of wisdom for trading metals

2. Look to the (far) East

Based on the trading day, the Asian markets are the first to open and first to react to any news that breaks when they are open. As such, Gero makes checking gold prices at the Tokyo Commodity Exchange (Tocom) and the Shanghai Futures Exchange a priority the night before and first thing in the morning. These exchanges also trade other metals, such as platinum at Tocom, but he focuses mainly on the gold price.

Additionally, he looks to see how much volume the exchanges saw overnight because that can be a further indication of what to expect in the day’s trading. He gets all of this information by visiting the exchanges’ websites at www.tocom.or.jp and www.shfe.com.cn.

3. Business as usual in the United States and Europe

Nothing moves the markets like a good (or bad) economic report. As such, knowing what reports or economic events are due to hit the airwaves that day, week or even month is of paramount importance, Gero says, because they could affect either industrial or retail demand. A list of upcoming economic reports and key stock earnings reports is published weekly on FuturesMag.com.

Although there are a number of reports and meetings he watches for, Gero says the monthly nonfarm payroll report (available at www.bls.gov/ces), released the first Friday of the month, is one he pays particular attention to simply because of its possible impact on monetary policy at the Federal Reserve. “The Fed has set a target of 6.5% unemployment, which essentially would mean the end of the [stimulus] punchbowl,” he says.

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