Why 'Cliff' Deal Is Your Reason to Buy These Commodities: Pro


Rejoice! After months of contentious negotiations, we finally have a deal on the "fiscal cliff." Not a comprehensive deal, but a cliff-averting deal nonetheless.

(Read More: What's in the 'Fiscal Cliff' Bill Passed by Congress?)

Is this a good deal or a bad deal? That's not the question I want to answer. Instead, I want to analyze the legislation and figure out: What's the impact on the futures markets?

Let's start with gold. You might have expected gold to sell off on a deal. But instead, the opposite happened, and gold rallied. Why? Well, while the deal will allow some of the tax increases to go into place, it did little to cut spending, and did not mention the debt ceiling.

Traders thus saw a deal that is not quite done yet, and a Congress that is setting up for another battle two months from now. Therefore, while uncertainty has been reduced, uncertainty remains. The money printing continues as well, and the end of year profit-taking has come to an end. (Read More: What You'll Want to Own in 2013.)

Look for gold to stabilize, and so long as gold remains above $1,650, I would buy gold on any dip. A move up toward $1,700 is a real possibility in the next few weeks. Meanwhile, support lies at $1,660 to $1,650.

Crude oil has also been strong. In my view, the deal is bullish for the price of oil, because it does remove some economic uncertainty. And any rally in equities will take crude along with it.

I would buy oil at around $88 to $89. The market will run into resistance at $93 to $94, and crude might be a sale on its first trip up to the $94 level. But overall, I would like to be long crude.

Read on for 10 Things You Need to Know to Trade Futures

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