How to Make Quick Profits in Gold at This Time
By George Leong for Daily Gains Letter |
A few weeks ago, I suggested that gold prices could likely head higher should the situation in Iraq escalate into a bigger conflict that brings in Iran and the United States.
In my view, gold is simply a geopolitical trade at this time, contingent upon what happens in Iraq. There’s also the situation in Ukraine. At this time, though, it appears as though President Putin has no interest in escalating the conflict and making the country vulnerable to more economic sanctions.
When I last wrote on the precious metal, spot gold was trading at $1,276 an ounce. The yellow metal managed to edge higher to $1,324, prior to the current stalling on the chart. If you bought any of the SPDR Gold Shares (NYSEArca/GLD) exchange-traded fund (ETF), I would suggest you take the money at this time.
Chart courtesy of www.StockCharts.com
Now, gold could easily surge if Iraq loses control of the country, but I truly don’t believe this will be allowed to happen by the United States and Iran. After spending more than a decade in Iraq and a trillion dollars trying to reform the country, there’s simply too much at stake to lose.
Assuming the advancement by ISIS is eventually eliminated, gold would surely lose its safe haven premium that is priced into the current value. We could, in this case, see prices fall back down below $1,300 an ounce, based on my technical analysis.
I also keep hearing about the massive buying of gold from India and China, yet I truly feel this is overblown at this time. The two countries are the biggest purchasers of the precious metal in the world, but with prices being higher, we are seeing a stalling in purchases. Retail buying in the two countries is also soft due to the higher prices.
A look at the futures market suggests traders are not super positive on gold and expect prices to stay below $1,400 an ounce until late 2018. The feeling is that the metal will trade around the $1,300 range or below for the next few years in the absence of a major risk.
The gold bugs will probably not like what I have said, but I simply do not see any major supportive news for the precious metal other than Iraq and Ukraine at this time.
My suggestion is to continue to view gold as an aggressive trade via buying on weakness down to below $1,300 and selling into rallies above $1,300. Using the SPDR Gold Shares ETF to execute this trade makes sense and is easy to perform, unless you are familiar with and interested in trading the higher-risk futures market.
Tags: China, ETF, gold, gold prices, precious metal, technical analysis
