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Gold Forecast 25 Feb 2016

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Gold Forecast 25 February 2016
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Gold bulls remain in control

The price of gold has become quite volatile after the yellow metal broke through $1200 a couple of weeks ago. We are taking a look at the major factors that are affecting the price in this rather interesting market.

Gold prices have spiked higher after the release of positive durable goods data from the U.S. defying expectations of a pullback. While the U.S. release was good, the price of gold is more prone to respond to risk sentiment.

Looking at the risk sentiment across the markets, today we have seen European indices pick up materially after the open which is seen by gold traders as a negative for the price.

After the release of the durable goods data which was better than expected, the price only spiked lower almost testing $1225. The market has interpreted the data as bullish and moved on to increase pressure on the upside.

While U.S stocks opened on a positive note, the reality from the weeks of bad data releases that preceded today's durable goods orders print is taking over once again.

How to trade

We would be buying daily calls on gold around $1234 if the price drops from current levels just south from $1237. Only a break below $1225 would be invalidating our trade and we would be buying puts on the yellow metal.

If your strategy is one of taking less risk, you can purchase binary options around $1232, which could also work on hourly expiries.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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