Next Stop In Gold, $1,750

February 8, 2021 12:30 PM
The U.S. Dollar was able to hold levels above .9100 all last week
We’re currently at a level where the gold bulls will really need to step up and quickly retrace levels back to $1,850
U.S. Treasury futures remain weak and Equities remain strong
Gold bars

Gold bars

Is $1,750 in the cards for gold?

It looks likely at this point, and saying so isn’t such a bold statement. The U.S. Dollar was able to hold levels above .9100 all last week. So far $1,785 has held, and I discussed this range of $1,800 to $1,785 in my last report. 

We’re currently at a level where the gold bulls will really need to step up and quickly retrace levels back to $1,850. I’m thinking that if there’s too much hesitation to recover quickly from here, the path of least resistance remains down. If the U.S. Dollar somehow reverses and moves back below .9100, then that would certainly support gold prices recovering. However, I’m thinking you’ll be able to enter on the long side at lower levels in the range of $1,750 to $1,740 for the April contract.

U.S. Treasury futures remain weak and Equities remain strong. Energy markets are very strong, as well. These are “risk on'' trades and, regardless of the reason behind them, they’re not good for gold. There’s no reason for the safe-haven trade. The currency trade isn’t working and we’re just not yet ready to embrace the inflation trade for gold. Inflation is out there and we can see it in other markets. Don’t give up on the gold trade; a patient approach is recommended

If you are interested in discussing the potential opportunities in the metals futures, please contact Frank directly at fcholly@rjofutures.com

About the Author

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