Gold can be in a holding pattern until investors find a fresh reason to get edgy, according to a veteran trader.
Ambrosino Brothers’ Todd Colvin told CNBC “Futures currently” last week which “$1330 to $1350 [an ounce] has genuinely been a very comfortable range for gold. The next catalyst can be probably going to come through the Fed as well as the U.S. economy.”
Even though Colvin believes earnings season, which just got underway, will be strong as well as won’t support a bull case for gold, he believes weaker-than-expected U.S. economic growth could prop up prices.
“If you see sub-2 percent GDP, which I think right currently isn’t on many radars, which could be a real catalyst,” he said.
Last Wednesday, gold reached its highest level since August 2016 as jitters grew over Syria as well as Russia — having a potential trade war with China still inside the picture. Once anxiety eased, gold backed down.
Colvin, who has worked on the Chicago Mercantile Exchange trading floor for more than 20 years, isn’t ruling out a fresh gold spike caused by tensions abroad. He believes a tenuous geopolitical situation could push prices to $1400 in a hurry.
however holding which level could be a challenge.
“If everything calms down, This particular could come right back down as quickly as This particular went up,” he said. “Gold can be a very emotional commodity.”
Right currently, the yellow metal can be trading around $1348. Looking at technicals, Colvin sees $1370 as a key resistance level. On the flipside, if prices trickle lower, This particular could entice buyers to return to the market in droves.
“If we get which close to $1330, I think you’re going to see plenty of those speculators come back with both hands to buy This particular,” Colvin said.