GO
Loading...

Pro: Sell Gold Ahead of the US Election

Gold takes a front-row seat for the U.S. election. Many traders on the exchange floor are speculating that a Mitt Romney win could continue to strengthen the dollar and could cause further sell-offs in commodities, including gold.

Comstock Images | Getty Images

Whatever your political flavor happens to be, gold has firmed up a little since Friday's close, although the dollar is continuing to make new swing highs. Currently gold is trading just below $1,680 — so do we just ignore the fact that the precious metal that is still trading up roughly 7 percent this year? The 100-day moving average is at $1,672 and the 200-day moving average is at $1,670. Furthermore, the 50 percent retracement this year is at $1,666.50. This tells me that there could be buying interest at this level. (Read More: What You Need to See Before You Buy Gold)

Ironically, immediate uncertainty is actually keeping gold's rebound quiet. With the election a day away, dollar shorts are buying to close, helping a dollar rally. The European Central Bank has a policy meeting this week as Greece once again steals headlines. Japan is considering itself to be entering a recessionary stage, and China ushers in a new generation of leaders. All of this is supportive to the dollar, which means continued pressure on gold, as well as other commodities.

So what's today's trade?

I will look to get short December gold at the first test to $1,692, placing my stop above $1,702 and my target at $1,672.

Since each dollar move in gold translates into $100 dollars, risk for this trade is $1,000 and reward is $2,000.

Finally, note that this is a day trade — if entry price is not triggered, I will cancel all orders at the close.

Good luck and good trading.

Follow me on Twitter, @Rilczyszyn, because my hand is on the trigger, and Sunday into Monday I am looking to fire the "buy" signal on gold.

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

Watch "Futures Now" Tuesdays & Thursdays 1p ET exclusively on FuturesNow.CNBC.com!

Like us on Facebook!
Facebook.com/CNBCFutures

Follow us on Twitter! @CNBCFutures

Questions? Comments? FuturesNow@CNBC.com


Contact Blog

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.