Trade Recommendation 20th January

Timestamp (GMT)
20th Jan 2021 13:30 £43.74
Direction
Sell
Target Price / Range
£43.12g initially
Timeframe
21st - 29th Jan 2021

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 prices rose on 20 January. They had been consolidating largely between $1,820 (oz) / £42.65 (g) and $1,865 (oz) / £43.71 (g) after their $145 / £3.40 drop over three trading days, from a high of $1,962.50 (oz)/ £45.99 (g) on 6 January to $1,817.10 (oz) / £42.58 (g) intraday on 11 January. Prices rose as high as $1,870.40 (oz) / £43.83 (g) on 20 January, settling at $1,866.50 (oz) / £43.74 (g)(February Comex).

That sort of price consolidation suggests that prices are preparing for a major move higher or lower. While there are some pressures for higher prices, a drop appears more likely.

Short term CPM would look for prices to drop back to $1,840 (oz) / £43.12 (g), and then $1,800 (oz) / £42.18 (g), and then $1,780 (oz) / £41.71 (g). There also is the potential for a sharper spike, similar to the $145 / £3.40 drop after 6 January. Such a sell-off would have an object or support level around $1,720 (oz) / £40.31 (g) or $1,700 (oz) / £39.84 (g).

It appears that financial markets, including gold, now may see a Reduction in Risk with the change of administration in Washington. There are expectations that the new U.S. government will be more forceful in providing the financial stimuli needed to assure a recovery stronger and sooner than might have been expected previously. It also is expected to make renewed efforts for an internationally coordinated effort to combat the pandemic and the economic recession and financial problems created by the government responses to the pandemic.

These impetuses, if they emerge, would be good for the dollar, the oil market, and the stock market.

Short term they may not be so good for gold and silver, but also not so bad. Longer-term they are good for gold and silver, so prices are likely to move sideways to somewhat higher as longer-term investors continue to build inventories of these metals, keeping prices from falling too sharply, along the lines of what CPM has been projecting for years.

Note: 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.

US$/GBP exchange rate used: 0.73