These trade recommendations are brought to you by CPM Group. Due to market conditions, the views and positions of trade recommendations can quickly change. We strongly advise you to monitor our published trade recommendations on an ongoing basis.
CPM issued a Sell recommendation for gold a week ago, on 8 July, when gold was at $1,816.90 / £42.00, expecting the short-term rise in prices then three days old would pause at $1,820 / £42.07 and prices would back down. Gold remained below $1,820 / £42.07 until 14 July, when it broke higher. It touched $1,835.00 / £42.41 this morning. Last Thursday’s Trade Recommendation stated that “If prices break forcefully above $1,820 – $1,824 / £42.07 – £42.16 there could be a wave of stop-loss buying and fresh long buying that could take prices sharply higher.” This has happened, and some further increase is possible.
There is short-term upward pressure that could take gold to $1,840 / £42.53, $1,850 / £42.76, or even $1,860 / £42.99. That said, prices just as easily could fall back. CPM had a slightly longer term view of gold prices, which it still maintains. That view was that gold might rise in the last two weeks of July as the August gold Comex futures contracts are bought back and rolled forward. That is still possible. As of 14 July there were 28.8 million ounces of August futures to roll forward. This move could take gold sharply higher.
This Trade Recommendation has an initial target for this period of $1,840 / £42.53, but gold price activity in July 2019 and July 2020 suggests that prices could rise further.
Last year gold rose from an intraday low of $1,690.30 / £39.07 on 3 June to a record $2,078 / £48.03 on 7 August, before falling back sharply over the next three trading days. The primarily upward pressure last July was due to the August Comex roll; once that roll was completed in early August prices dropped back to $1,865 / £43.11 in three days.
Interestingly, the August roll is going primarily into December, rather than the next active October contract. This indicates that shorts on the Comex expect prices to remain stronger over the next two months.
Initial Target Prices and Timeframes are just that: Initial. If CPM does not issue a new Recommendation during or after that time it indicates that CPM is maintain the posture in the most recent Trade Recommendation. Discretion should be allowed at +/- 0.20% of the price at the time each TR is issued from the target. Recommendations are valid until the target date or a new Trade Recommendation or message is issued by CPM. CPM’s preferred investment strategies use physical, futures, forwards, and options. US$/GBP exchange rate used: 0.72