Gold has impressed, sticking to the forecast for higher prices we laid out in our first “Alert” of the year (Vol. 20, #1). Currently trading around $1,330 per ounce, it is approximately halfway to our first upside objective of $1,433 in the June contract. The path up has been slow and steady. Just as $1,160 was a key area to the downside, the old swing high of $1,362 is an important area to the upside.
We expected the yellow metal to run into resistance here and it has. Gold is short-term overbought so it would not surprise us to see a continuation of today’s corrective setback and a few weeks of consolidation around the 200-day moving average before this market can regroup and make an assault on the $1,362 level. We are looking at two consecutively higher closes over this area as a signal that out first target of $1,433 is in reach.
It looks like the February delivery period for Comex contracts will end Friday without the “short squeeze” many have been predicting. April is the next high volume delivery month.
What to Do Now
If you own more than one of the bull spreads suggested in our January “Alert” and can exit half for twice your initial entry level or higher, consider doing it. Hold the other half for a move to our $1,433 objective. RMB Group trading customers interested in this doing this should contact their brokers.
If you are not an RMB Trading Customer and want to know more about how we are playing gold and silver, give us a call at 800-345-7026 (toll free) or 312-373-4970 (direct) and we’d be happy to go over a fixed risk strategy with you. Contact us to learn more or can also e-mail suerutsen@rmbgroup.com. Put the word “gold” in the subject line and we will contact you.