By Barani Krishnan
Investing.com - The gold speculator, whether bull or bear, may have found the perfect play for now: Buy at near $1,850 and sell well before $1,900.
The $40 to $50 target for each trade may seem like a dumbed-down way to trade gold when a myriad of chart signals and the intersection of Treasury yields and the dollar should be setting the course.
Yet, a look at the weekly fluctuations on Comex since mid-May suggests that the former would have generated more wins than any artsy-fancy strategy involving multiple hedges.
As the week rolled to a close, an all-too familiar pattern reinforced itself on those who still cared to call gold a hedge against inflation — which it clearly was not, given its inability to respond to America’s worst concerns about price pressures in more than a decade.
The front-month gold futures contract on New York’s Comex settled at $1,879.60 per ounce, down $16.80, or 0.9%. For the week, it was down $12.40 or 0.7%.
The high for the week was $1,906.15 while the low was $1,871.95 — keeping within the $30 to $50 range of the past month.
The spot price of gold, reflective of real-time trades in bullion, was at $1,876.65 by 3:45 PM ET (19:45 GMT), moving between the day’s peak of $1,903.01 and bottom of $1,874.65.
Already in a steady rut since its late Thursday return to $1,900 pricing, gold took a decisive turn lower after Friday’s release of the University of Michigan’s closely-followed Consumer Sentiment for June, which came in at 86.4, versus expectations for 84.2 and the May reading of 82.9.
That nudged the 10-year Treasury yield to 1.454%.
The bigger damage to gold probably came from the somewhat inexplicable rebound in the dollar — although the greenback also did not get too far, with an intraday high of 90.61.
Phillip Streible, precious metals strategist at Blueline Futures in Chicago, said the logic-bending move in the dollar did not make Friday’s trade in gold any easier.
“It’s the same mind-numbing thing each week,” said Streible. “Between gold, the dollar and yields, you have three different plates spinning at the same time, and you’re trying to decide which one to go with — when none really is appealing for now.”