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Price of Gold Fundamental Daily Forecast – Smart Money Looking for Value, Not Chasing Headlines

By:
James Hyerczyk
Updated: Feb 25, 2020, 13:18 UTC

The month long bullish narrative in gold is still intact. The trend is still up so focus on finding value instead of the next bullish headline.

Price of Gold Fundamental Daily Forecast – Smart Money Looking for Value, Not Chasing Headlines

Gold futures are trading lower on Tuesday as profit-takers entered the picture. Since yesterday’s high at $1691.70, the market has given back nearly 50% of its entire rally from $1564.40 on February 12.

The move in gold supports my favorite argument that it is an investment and not a safe-haven asset. Did the coronavirus threat go away overnight? Are the central bank talking about holding rates steady or even raising them? Did I miss a report that showed the rapid healing of the global economy? The answer to all three sessions is no.

At 12:54 GMT, April Comex gold is trading $1649.40, down $27.20 or -1.62%.

Long-Term Picture Remains Bullish

Let’s start with the premise that the fundamentals will remain bullish for gold as long as the major central banks find no reasons to raise rates. Let’s also say that gold will see more upside pressure if the majors start trimming rates or announce new measures of quantitative easing.

With those premises in mind, as an investor, your main focus should be on getting the most bang for your buck. Value is the key in making a good return from your investment in gold. Buy it when it’s in a value zone, sell it when it goes vertical on the charts or becomes overpriced. Try to avoid chasing it because of a headline.

Even in the greatest bull markets, there are periodic setbacks. The industry has to pay itself in the form of commissions so you’re going to see two-sided trading at times. Furthermore, the hedge funds have to get paid to so they are going to take profits when prices rise to far above value. The good news is, they are going to be more than willing to reenter when prices return to value zones.

Daily Forecast

The month long bullish narrative is still intact. The trend is still up so focus on finding value instead of the next bullish headline.

Our work suggests the nearest value area is $1628.10 to $1613.00. That’s where we believe investors will be re-entering the market after this short-term correction.

The second value area is $1621.40 to $1604.80. Combining the two zone indicates that $1628.10 to $1621.40 is the sweet spot for new buyers.

Watch the price action and read the order flow when prices enter value areas. And make sure you have an exit strategy before you buy.

The recent price action is being driven by an unpredictable event. Don’t think too much about where it can go on the upside, but focus on where you will be wrong. The upside will take care of itself if you are right.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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