Gold and the Dollar – Trade ideas for Friday [Video]

Gold

Gold collapsed $100 when the CPI number was released on Wednesday and despite a very strong PPI number yesterday, gold recovered all of the losses.

September CPI rose 0.6% m/m and 3.7% y/y, PPI surged 1.3% m/m, and retail sales jumped 0.8% versus 0.3% expected.

I don't understand why gold has recovered so strongly, especially as Treasury yields remain elevated, with the 10-year around 5.19%–5.27% and the 30-year near 5.5%–5.67%.

But I learned many years ago to stop trying to make sense of the market!!

There is quite strong trend line resistance at 4185/4190 and also at 4210/4220.

Perhaps I could suggest selling a small amount at each level with a stop above 4230.

If we reverse again as indeed we keep doing We could fall to 4170/4165 and 4130, even 4110 is not out of the question. 

With the way the market has been reacting this week we could even see 4100 and I would not rule out a retest of this week's and the October low at 4075 /4065.

So the risk should be worth the reward... I could suggest scaling out gradually and trailing stops, in the hope of capturing a big move before the weekend.

I'm only guessing but maybe this is a short squeeze before a return to focusing on the fundamentals.

We do have strong support at 4075/4065 and longs need to stop below 4055.

A break above 4230 should be a decent buy signal triggering a move to 4260/ 4270 and even 4300/4305 is possible.