Gold has risen almost 20% year to day, but gold futures have now fallen under the psychologically round number of $1500 and as of Monday nearing $1450. At $1,457.10, Gold prices are at their lowest since early August.
J.P. Morgan Securities unwound its gold hedge because of “signs of a cyclical recovery, easing geopolitical tensions, synchronized monetary easing,” the bank’s asset-allocation team said Thursday. Citigroup Inc. strategists abandoned a long position in gold, in their asset-allocation note Thursday. Earlier that week, money managers boosted their bearish wagers on the metal.
Recent geopolitical and economic concerns had underpinned demand for the metal as a haven asset -- until last week. That was reversed by less-negative signs for the global economy, a strengthening dollar and, most importantly, new progress in global trade talks.
“It’s been sentiment around the U.S.-China trade relationship that’s mostly driven the price of gold,” Kristina Hooper, chief global market strategist at Invesco Ltd., said in an interview. “That sentiment has improved, so there hasn’t been as much of a need for gold in recent weeks. But as we know that can change on a dime.”
So is the move to the downs short term or is there more downside risk longer term? To answer this question, it really comes down to what type of trader you are.
If you are a Scalper is all about taking very small profits, repeatedly. Typically, trades last from seconds to minutes. Scalping is a trading strategy that attempts to make many profits on small price changes. So maybe this morning you caught the move down at 10 AM or the move back up on the 1 min chart.
Day trading is all about buying and selling on the same day, without holding positions overnight. Compared to scalping, this style calls for holding positions for minutes to hours versus seconds to minutes. A day trader closes out all trades before the market closes. So maybe you caught this move down on the pull back at 5 AM yesterday and rode it down until 11 AM yesterday.
Swing / Position trading a style of trading that attempts to capture gains in a stock within one to seven days (swing) or
in trades for weeks to months (position). The position trader endeavours to anticipate whether the current trend will continue for a much longer term than a momentum or swing trade. So maybe you are waiting for price to pull back to the monthly demand to go long.
The example above explains why when someone ask me what the trend or entry for the trade set-up, I always asks, what timeframe are they trading on because as you can see, you could go long or short...it all depends all what type of trader you are.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
