Nov 06

Sell Gold

By MultiplyWealth's Team

Gold takes a front-row seat for the U.S. election. Many traders on the exchange floor are speculating that a Mitt Romney win could continue to strengthen the dollar and could cause further sell-offs in commodities, including gold.

Whatever your political flavor happens to be, gold has firmed up a little since Friday's close, although the dollar (Exchange:.DXY) is continuing to make new swing highs. Currently gold (CEC:Commodities Exchange Centre: GCCV1) is trading just below $1,680 - so do we just ignore the fact that the precious metal that is still trading up roughly 7 percent this year? The 100-day moving average is at $1,672 and the 200-day moving average is at $1,670. Furthermore, the 50 percent retracement this year is at $1,666.50. This tells me that there could be buying interest at this level. (Read MoreWhat You Need to See Before You Buy Gold)

Ironically, immediate uncertainty is actually keeping gold's rebound quiet. With the election a day away, dollar shorts are buying to close, helping a dollar rally. The European Central Bank has a policy meeting this week as Greece once again steals headlines. Japan is considering itself to be entering arecessionary stage, and China ushers in a new generation of leaders. All of this is supportive to the dollar, which means continued pressure on gold, as well as other commodities.

 

So what's today's trade?

I will look to get short December gold at the first test to $1,692, placing my stop above $1,702 and my target at $1,672.

Since each dollar move in gold translates into $100 dollars, risk for this trade is $1,000 and reward is $2,000.

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