UPDATE: Gold looks asymmetrical to the upside

UPDATE: Gold looks asymmetrical to the upside

Trade View
Short Term / Buy
Kay Van-Petersen

Global Macro Strategist

Instrument: XAUUSD
Price Target: $1,275/oz, then $1,292/oz and $1,298/oz.
Market Price: $1,255.48/oz

Background:


We are in a temporary window where sentiment seems to be risk-on, with the dollar weaker and we're getting a technical bounce from all the trade tariffs and trade wars fog. Gold has corrected smartly from its $1,300/oz break of a few weeks ago (at which point I was bearish) to bounce smartly off its 200-week average of $1,235/oz. 

It looks like we could get an easy leg to $1,275 / $1,300/oz, with the downside supported at the $1,250/oz to $1,235/oz range.

Parameters:

Entry: $1,255.48/oz
Stop: $1,250/oz and $1,235/oz.
Target: $1,275/oz, then $1,292/oz and $1,298/oz.
Time Horizon: short-term

UPDATE to the trade view originally posted on  10.07.2018: Following the poor price action by precious metals last week, with an inability to catch a bid despite S&P futures selling off over 1% in the Asia morning and US yields being very tight, we close out our initial short-term bullish stance, that was originally placed on the basis of the technicals looking constructive and the sell-off overdone. 

The strength of the US dollar continues to overwhelm any near-term agenda in the markets and if we see a break of $1,235/oz of gold (200-day moving average) we may have to head to $1,200/oz for a retest.

Gold 5-year chart.                                                                                                                               Source: Saxo Bank
Management And Risk Description:

Position is circa 1x capital, so for the Macro Monday book that's circa $10m. The key risk is obviously USD strength returning much sooner than anticipated, resolution of trade wars and US bond yields spiking higher. A sustained break sub $1,235/oz would suggest that our timing on this tactical gold long is wrong.


Trading plan

Looking for a gold move up to circa $1,275/oz to take off half the position and leave the remaining 50% to be taken off at $1,292/oz and $1,298/oz. Whilst we may potentially be looking to add at $1,235/oz, the most important thing is to keep track of the near-term sentiment on the USD. This is very much a technical bounce play.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

A compiled overview of Trade Views provided on Home.saxo can be found here (https://www.home.saxo/en-gb/insights/news-and-research/trade-views/report).

Disclaimer

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice or a personal recommendation and does not take into consideration your objectives, financial situation and needs. Saxo Capital Markets UK Limited will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information. We assume no liability for errors, inaccuracies or omissions contained within these materials.

It is important that you understand that with investments, your capital is at risk. We offer leveraged products which carry risk and can result in losses that exceed deposits. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more here.

Additional Key Information Documents are available in our trading platform.

Saxo Capital Markets UK is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871

Please read our full disclaimer - https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992