After a month of over 13% gains, gold is still a buy for a couple reasons. The past three days have given back a little more than 5% of the overall gains, but this retracement could be a good sign for the gold bulls that missed the first colossal run.
Why Gold Is Still A Buy
Although there have been talks of a ceasefire on the Russian-Ukraine borders, progress is little to none as we don't see any real sign of Putin taking the foot off the gas right now. What we do know is that the fighting continues to be present and sporadic with mixed military sentiment from Russian soldiers who have been largely misinformed about their objectives.
COT also suggests more bullishness for the metal as the number of long contracts has increased by over 4 million while short interest has decreased by 10.4 million contracts.
Commodities have been on a tear lately due to the oil supply cutoff and fears of persistent fighting in eastern Europe. Uncertainty will keep investors on edge and steer them away from risk-on behavior. So, gold and USD will be good safe havens in the meantime.
A couple things to notice on the 1D chart suggest a more solidified direction is set for gold. One of the factors is the natural pullback we just saw. An indefinite rise to the top without any sort of pullback would raise some eyebrows, so a minor pullback on the daily is a healthy thing for price action. The metal also landed right on support, which could serve as a good entry level for long positions as the latest candle shows rejection from the lows. And lastly, gold formed a golden cross pattern in February marking that a new direction has likely been decided for the metal to the upside.
All these factors in place could help launch gold higher as it has done for the past month or so. However, volatility has increased tremendously, so a small leverage size is still recommended for these giant moves.
Smart Money Tracker
See where big money is flowing with the A1 Edgefinder's smart money tracker! With one click, see where the biggest money flows are entering and exiting through COT data.
Today at 2:00 pm EST, the Fed will announce their latest interest rate decision. Estimates suggest a smaller hike of 25 basis points this time around. Here are some things to consider before the FOMC decision later today: The Fed has struggled to tighten their grip on inflation without causing too much disturbance in the […]
With the holiday season lingering on and a new year on the cusp of arrival, traders may glance at the calendar and notice there is not much economic news to anticipate on Friday to cap off a light week. In situations like these where there can be lulls in bullish and bearish momentum due to […]
As the fiscal year comes to a close, consumers will likely finish shopping for the holidays, and traders and investors will get some respite thanks to a long weekend due to bank holidays around the world. While concerns about further stock market selloffs may be lingering in the minds of some, a promising set of […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here