Gold/Silver: Key levels and other inflating commodities

After working in commodities, equities, and futures for the past 20 years, there are the two reoccurring questions I have always asked myself at the end of each trading week. Am I involved in the best-performing asset classes this week, and how can I improve my ability to identify these outperformers next week? As of this week's writing, two of the best performers are copper and sugar. Congrats to many of you working with us were able to capture this upside move. Before we get started on gold and silver, I am also the author of the "Breakfast Report" that provides actionable trade recommendations in exotic commodities like cocoa, coffee, cotton, sugar. If you are interested, you can request a no-obligation two-week FREE trial of the daily report here The Blue Line Breakfast Report Two-Week Free Trial Sign up.

Daily Sugar Chart

Fundamentals: Gold and Silver had a mini washout early last night and have rebounded steadily into the morning. The early parts appear to be a complete rejection on a technical basis, ignoring the new swing highs in Treasury yields and instead focusing on further U.S. Dollar weakness. Flash PMIs in the U.S. were terrific, Manufacturing was in line with high expectations, and Services topped an elevated 58.9, and the initial reaction in gold has been higher. The best part of the situation is that such a washout, rejection, and rebound align with China coming back from the Lunar New Year celebration next week, a time that has brought bullish seasonal tailwinds.

Daily Gold Chart

Technicals: As we said yesterday, the tables are turning. Gold is testing rare major four-star support. Last night's tape made the necessary price discovery and found buyers as gold traded to a low of 1759 and silver flushed to 26.105 and held our next level of major three-star support at 25.92-26.25. The bulls must achieve a close above major three-star resistance at 1790-1796 to get the ball rolling on neutralizing the most recent wave of weakness, and silver must reach the elusive close above 27.62-27.88 to invite added buying. Gold needs a close above rare major four-star resistance at 1819-1823 to break this intermediate-term downtrend. If you would like to improve your chart reading, we created a Free New "5-Step Technical Analysis Guide to Gold," which you should print out. The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.

Our strategy on gold

From my last article, "Finding Value in the Gold Price Volatility," We suggested that our clients consider using TWO Micro 10 oz December Gold contracts per $25,000 and buying ONE at 1800 and ONE at 1755, with a stop at 1690. Doing such would ideally risk $1,750. We would look to a gold target of 1975/oz, which would allow for a profit of $4,175. If you would like to be up to date on the developments of our strategies in the futures and commodities markets, please register for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up.

Good luck and good trading,

Phillip Streible

Chief Market Strategist


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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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