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Ticker tape by TradingView

March 11, 2022

This Metal Is Still A Buy

Frank Cabibi

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

Fundamentals

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.

Technicals

still a buy

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.

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