Speculators who have not been paying attention to the price of gold the past day and looking at its value today may wonder if they have missed the opportunity to take advantage of its trend. First traders should take a deep breath and understand the momentum of the precious metal has been strong since the middle of August 2018. Yes, the gains made in gold since the 19th of March of this year have been significant. The commodity has moved from a value of 1460.00 since March to above 2025.00 USD per ounce as of this morning.
Is gold overbought? Is there too much exuberance? Is this a speculative bubble ready to burst? These are legitimate questions, but answers are not quite as easy to discern. Short term traders using technical charts will be hard-pressed to look for support and resistance. Yes, you can easily look at a chart and point to a value which has shown some type of quantifiable pattern and say ‘this is the spot’, but the gold market is moving fast and its trajectory in a world filled with coronavirus concerns, suspicious central bank policies, and geopolitical worries should be taken into consideration too.
Speculators may attempt short term trades and look for trends and the potential of reversals, but financial planners and institutional investors may be gearing up for the long term and be looking at gold as a safe haven as the current state of world affairs continues to rattle. So how do you take advantage of speculative probabilities? Follow the trend and use risk management. The flourish of buying the past twelve hours in gold is not an accident, it has been traversing upwards for nearly two years, and betting against the trend and speculating on pivotal reversals is likely going to hurt your trading account.
Gold has moved dynamically this morning and picking short term support to use as a stop loss ratio is dangerous. Be careful regarding the amount of leverage you use while trading gold and try not to be too greedy. Overextending the size of the cash position you speculate with could prove dangerous. Gold continues to move fast. Support near the 2020.00 to 2025.00 levels could be considered.
And if you have missed the point of this article, I will make it clear, if you are going to speculate on gold in fast market conditions, it might be best to be a buyer. The price of gold is climbing and while it will certainly reverse lower and test perceived support levels, the precious metal’s trend is vibrant and strong.
Gold Short Term Outlook:
Current Resistance: 2040.00
Current Support: 2025.00
High Target: 2065.00
Low Target: 2015.00
