Quick Analysis on Oil and Gold

Finding the bottom of a market is every single investor and trader’s dream. This is the moment when prices reach their lowest and the only where that prices can go is upward. This is exactly the situation that many experts have predicted for two of the most widely traded commodities in the near future: gold and oil. We will take a quick look at each of these commodities and let you know whether or not the predictions hold merit or not. Let’s start with oil.

Oil

Oil is the world’s most heavily traded commodity, and it’s at a very low price right now, just under $50 per barrel. Some futures contracts are even trading well below $40 per barrel right now. Prices are down below lows established in 1998, and things have not looked good for the commodity. However, recent price drops have not registered on many technical indicators because of their short lived nature. This could point to the fact that the severe drops in prices were anomalies and not indicative of the actual health of oil’s price. In fact, many charts show upward divergences about to occur, indicating that the bottom has been achieved.

Our long term analysis has long been that oil will go back up. It’s hard to tell when prices will go back up, but this evidence seems to point to the fact that an upward move is about to occur. Whether or not it will be lasting remains to be seen, but prices are much lower than the market warrants right now, so moving upward from this moment seems to be the best move. Establishing trades, particularly with binary options if you do not have easy access to the commodities marketplace, that establish this position will be a good choice.

Gold

Even though gold is not as heavily traded as oil, there’s typically more information out there about it because of the fact that it’s so closely connected to many currencies. Gold, unlike currencies, has an upward direction overall. A lot of the downward motion we have seen in gold is not because it has lost value, but rather because there are more compelling places to put your money right now. The volatility between the U.S. dollar and the euro, for example, has created a ton of opportunities for making quick money in the Forex market. Now it seems that the euro has begun to stabilize, as has the dollar as a result. The U.S. stock market does look like it’s entering a bear phase (although this is still debatable), which could drive the dollar up and gold down, but as of right now, this hasn’t yet happened.

Again, our long term analysis here says that gold will go up. It has done so for a very long time, and although it is connected with a slightly inverse correlation to the U.S. dollar, there is still plenty of room for it to grow even if the dollar does go up comparatively. This becomes especially true if things remain choppy in the stock market and create extra volatility for the dollar and other major securities. Gold is much harder to trade short term than oil, but if you are taking a position trading approach to gold, going long with futures contracts or with binary call options is the correct move. Short term trades need to be taken on a case by case basis for the time being. The longer that the Fed stalls on raising rates, the better able gold will be to keep going up, so keep this in mind as you contemplate taking a position.