Gold rose to a 1-1/2 week high on Friday as investors fled to safe haven assets after a disappointing jobs report added to mounting fears about the pace of recovery in the US.
But analysts said the gains were tempered by some caution about how much further gold’s rally could really go, and the lack of large position-taking among investors ahead of the long Labor Day weekend.
However, "Fast Money" Trader Patty Edwards had her own words of caution: don’t get caught in a gold trap.
She said the past week or so has actually been a bear trap for those who thought gold was going down.
Calling gold the fourth currency, Edwards said it’s the one without political implications.
“It’s the one pure currency out there at this point and I’ll be staying long,” she said.
Trader Stephen Weiss has been out of gold, but said if it pulls back he’s getting back in.
JJ Kinahan, however, suggested that if you want to trade the precious metal, trade it in some sort of call spread.
“I would not go long gold outright because I’m still of the opinion that you may be able to make $50 to the upside but if something happens you could lose $200 to the downside in a much quicker fashion,” he said.
Whatever you do, Brian Kelly said, don’t buy gold solely on the fact that you think QE3 will be about printing money. That’s not what’s going to happen, he said, and therefore if you buy the precious metal for that reason, you will be “sorely disappointed.”