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.
Gold almost hit $1,880 / £44.66 on Tuesday 16 November, CPM’s short-term target, getting within 50 cents of that level at $1,879.50 / £44.65. Prices subsequently backed off, but remained above $1,850 / £43.95 yesterday and so far today.
Gold has been testing $1,870 / £44.42 for the past six days. While prices might consolidate between $1,850 / £43.95 and $1,870 / £44.42 or $1,880 / £44.66 in the next two weeks, CPM’s analysis suggests another break above $1,870 / £44.42 is more likely, with prices rising back to $1,880 / £44.66 or even toward $1,900 / £45.14. Prices will have to settle above $1,880 / £44.66, backed by strong volume, before being able to reach $1,900 / £45.14.
The December Comex contract is an actively traded contract, with 27.3 million ounces of outstanding open interest as of 16 November and eight trading days left before its first delivery date. These are interrupted by the Thanksgiving trading holiday Thursday, with trading likely to be thin on that Friday as many take the day off as well. In this environment, a break above $1,870 / £44.42 seems reasonable to expect, with a price move back to $1,880 / £44.66, $1,885 / £44.78, or even $1,900 / £45.14.
Since our last two gold Trade Recommendations were Buy signals with targets at $1,850 / £43.95 and then $1,880 / £44.66, an investor ostensibly would be long following CPM’s actual consulting trading practices. So, at today’s price today’s Recommendation might be implemented as staying long any physical, future, or forward position with a higher target but purchasing either lower gold price puts or a put spread to protect against a move toward declining prices while preserving the long exposure.
Notes: Initial Target Prices and Timeframes are just that: Initial. If CPM does not issue a new Recommendation during or after that time it indicates that CPM maintains the posture in the most recent Trade Recommendation. Discretion should be allowed at +/- 0.20% of the price at the time each TR is issued from the target. Recommendations are valid until the target date or a new Trade Recommendation or message is issued by CPM. CPM’s preferred investment strategies use physical, futures, forwards, and options. US$/GBP exchange rate used: 0.74