December ‘21 gold futures are rapidly rising on higher than expected CPI data. Gold has struggled for some time to show any significant strength from the inflation story as the sentiment has been that it will be a transitory event and there are still better places to put your cash. However, after yesterday’s PPI and today’s CPI data the markets are having to face up to the fact that the situation is not improving as quickly as hoped. There is also support based on concerns of another possibly defaulted payment by Evergrande in the face of a weak Chinese property sector. From a technical perspective gold has broken out above a significant resistance point on the daily charts and is now above the trading range it has been locked in since June. This is bullish. Gold has managed to achieve this on a day when the dollar is also going up. This is also bullish. I haven’t been particularly excited by gold outside of short term trades for most of this year. However, If gold can close above resistance and stay outside of the range it has been trapped in, there is a good chance to see this rally follow through and continue. Should we see this market turn bullish I would recommend keeping an eye on interest rates. If the Fed decides to become more aggressive it could pull the rug out from under gold.

Eric Scoles

Market Strategist

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Blue Line Futures LLC

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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