Old Resistance Becomes New Support!
Gold futures have gone parabolic this year, outperforming Stock Indices like the Nasdaq 100 and S&P 500. Can this rally continue? Or can we continue to make new all-time highs in what may be a new “Bull Cycle” for the precious metal.
Key Drivers:
Gold is typically sensitive to monetary and fiscal tightening. When interest rates and government spending are at tighter levels, the metal typically struggles to push higher. However, this has not been the case with this rally, despite the 10-year yield climbing 50 basis points YTD, the metal has continued to break records.
There seems to be more macro influences in this rally, for example resilient US economic data, and bets that the Fed will deliver fewer rate cuts than previously priced in are lending support to the dollar. That is weighing on the Chinese Yuan. The PBOC is one of the largest holders of US treasuries, and it is possible that they may be selling US treasuries to purchase even more gold. They now hold about 72.74 million toy ounces in reserves, up from 66.50 million troy ounces this time last year.
Technicals:
Technically, Gold futures are overbought, as the RSI shows a level above 75. Old resistance of 2082-2105 will now become new major support. This level also coincides with the 21-day EMA. If we have a large pullback, we will want to hold this level to keep bullish momentum intact.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC 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. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Key Drivers:
Gold is typically sensitive to monetary and fiscal tightening. When interest rates and government spending are at tighter levels, the metal typically struggles to push higher. However, this has not been the case with this rally, despite the 10-year yield climbing 50 basis points YTD, the metal has continued to break records.
There seems to be more macro influences in this rally, for example resilient US economic data, and bets that the Fed will deliver fewer rate cuts than previously priced in are lending support to the dollar. That is weighing on the Chinese Yuan. The PBOC is one of the largest holders of US treasuries, and it is possible that they may be selling US treasuries to purchase even more gold. They now hold about 72.74 million toy ounces in reserves, up from 66.50 million troy ounces this time last year.
Technicals:
Technically, Gold futures are overbought, as the RSI shows a level above 75. Old resistance of 2082-2105 will now become new major support. This level also coincides with the 21-day EMA. If we have a large pullback, we will want to hold this level to keep bullish momentum intact.
Check out CME Group real-time data plans available on TradingView here: tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC 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. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
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