Commodity Chart Of The Day: Gold

Includes: GLD, IAU
by: Matthew Bradbard

Commodity Chart Of The Day

Daily Gold

(click image to enlarge)

I stand my ground that the metals complex is due for a correction. Yesterday, silver was my focus and today, gold. Prices have traded down by almost $45 high to low, and have settled down $30 in recent dealings. My stance is we trade under $1700/ounce, making our way towards the 50% Fibonacci level, approximately $55 from today's settlement. This target also coincides with the 200 day MA -- identified by the red line.

Aggressive traders could be involved in bearish plays… my suggestion is back ratio spreads in February, trying to capitalize on further deprecation. Expect volatility, and with the fiscal cliff on-again/off-again resolution, this should cause wild swings. Because of this, I've opted to trade options with clients as opposed to futures. For those not familiar with this strategy, I've sold close to the money puts and bought multiple further out of the money puts. The idea is with a volatile movement south, traders should make more on the multiple lower strike puts than they lose on the closer to the money put.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.