Where are the 'stops' and 'bargain hunters' in Gold?Precious Metals have softened recently after continued liquidation, stop-loss selling, and de-grossing pushed Gold futures down to a value zone of $2300/oz on the June futures contract. Since then, bargain hunters have stepped in, driving futures $30 off their lows.
The potential for a strong recovery in gold is on the horizon, especially if miners strengthen and ETF inflows follow. While geopolitical safe-haven flows have eased recently, with Middle-East tensions waning, it is often the calmest before the storm.
'Stops' refer to the price levels at which traders exit their positions, and understanding these can provide insights into market movements. For the June gold contract, pocket support remains at $2299-2294, with crucial trendline support at $2286/oz, where stops will most likely remain. On the upside, short sellers will place their stops just above $2400, where any breach should allow prices to run back to all-time highs.
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*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
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