These trade recommendations are brought to you by CPM Group.
This is a ‘qualified’ Stand Aside ( hold ) recommendation. Gold prices have risen from less than $1,800 10 / £45.07 days ago to as high as $1,941.90 / £48.62 this morning. All of the factors that have driven prices sharply higher remain in place, with some having increased in intensity. The dollar has been falling sharply, in part as investors look at the worsening coronavirus pandemic within the United States, which has prompted a large group of public health care professionals to urge shutting down the U.S. economy again. The U.S. government meanwhile begins a more public round of demonstrating its inability to deal with the Covid-19 pandemic and the economic chaos that has ensued, which will keep the dollar on the back of its heels for a while now.
The stock market is up, as investors park money there with no interest in actually investing in productive assets and few other alternatives. Some of the viable alternatives have been precious metals, which have risen sharply as a result.
One of factors pushing gold prices higher is the need to roll another 22.7 million ounces out of the August Comex gold futures contract, first delivery date for which is this coming Friday, 31 July. This may continue to push spot Comex gold prices higher, for the next five days or so.
The adage is “Do not stand in front of a runaway train.” Accordingly, it would not seem wise for short-term investors to sell today. They should stand ready to sell by Friday or Monday, depending on where the market and broader economic conditions are, and how the August Comex roll is progressing.
Short term investors may be tempted to buy for this week, but the buying should have been done already. Buying around today’s lows of $1,899 – $1,920 / £47.55 – £48.08 might make sense. Buying above that may seem unwise and overly risky.
Note: Discretion should be allowed at +/- $2.00 / £0.05 from the target.
US$/GBP exchange rate used: 0.78