{"id":20404,"date":"2022-07-07T20:09:33","date_gmt":"2022-07-07T12:09:33","guid":{"rendered":"https:\/\/glutenfreepleasure.com\/__proxy_domain\/www.phillipnova.com.sg\/?post_type=market_trends&p=20404"},"modified":"2022-07-07T20:41:18","modified_gmt":"2022-07-07T12:41:18","slug":"a-golden-opportunity","status":"publish","type":"market_trends","link":"https:\/\/glutenfreepleasure.com\/__proxy_domain\/www.phillipnova.com.sg\/market_trends\/a-golden-opportunity\/","title":{"rendered":"A Golden Opportunity?"},"content":{"rendered":"\n

By Eric Lee, Sales Director, Phillip Nova<\/em><\/p>\n\n\n\n

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In my recent post about Silver, I had explained on how we can make use of the data provided by Commitment of Traders (COT) report to have an understanding on the supply and demand on commodities that are traded on futures exchanges.<\/p>\n\n\n\n

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We can see another similar opportunity for Comex Gold. To illustrate how we can do so, I will be diving a little deeper using the COT reports on commercial traders\u2019 activities and Open Interest indicator to look for markets that are favorable for a short to medium upward move.<\/p>\n\n\n\n

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You may refer to my post on Silver for a simple explanation about COT report: Looking for a Silver Lining<\/a>.<\/p>\n\n\n\n

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CME Group has a very good explanation and simple example about Open Interest. I would suggest that you take some time to read it: https:\/\/www.cmegroup.com\/education\/courses\/introduction-to-futures\/open-interest.html<\/a><\/p>\n\n\n\n

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This sentence is perhaps the best summary on the concept of Open Interest and gives us an idea on how to use this data for trade generation. When Open Interest is low, it likely meant that there is very low market participation in the product, due to lack of direction or lack of interest. This is also one of the main differences between Commercials and Speculators. Commercials buy and sell a commodity because of their day-to-day business operations. Thus, their actions depict the real economic supply and demand of the commodity.<\/p>\n\n\n\n

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Source: Tradingview.com<\/figcaption><\/figure>\n\n\n\n
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How do we use COT Commercials and Open Interest to look for market set up for a potential up-move?<\/strong><\/p>\n\n\n\n

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  1. For COT Commercial, one technique is to measure its half-yearly relative strength. If Commercials reported higher number than 6 months ago, then it meant that over the past 6 months, they had been buying more than selling Gold. As such, we can deem that there is a stronger demand for the asset. Technically, we want to wait for a peak to form. As can be seen from the chart above, gold price had rallied after the Commercials peak showed relative strength.
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  2. Open Interest (OI) works more like a contrarian indicator. As OI falls below 500k, it generally meant lack of interest in the asset. This is the time to start looking for buying opportunities. As market interest starts drumming up again, those traders who had shun gold will start coming back again, driving up demand for the commodity and possibly pushing the price higher along the way.<\/li><\/ol>\n\n\n\n
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    As can be seen from the chart above, Gold\u2019s COT report is currently showing its Commercial data as trading in 3 years\u2019 high. Open Interest is below 500k. Next, we can watch out for COT weekly report every Friday for a peak in Commercials. Then, traders can switch to a daily chart to look for entry signal based on technical analysis.<\/p>\n\n\n\n

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    How to trade\/invest in gold?<\/u><\/strong><\/p>\n\n\n\n

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    In Phillip Nova, we have the platforms and products available for you to trade in gold. The gold instruments you can look into are:<\/p>\n\n\n\n

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    – Comex Gold Futures available on Phillip Nova platform<\/a><\/p>\n\n\n\n

    – Spot Gold available on MT5 platform<\/a><\/p>\n\n\n\n

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    These are available in our demo accounts as well, click on the link below to register for demo trading account with us where I am pleased to be in touched with you.<\/p>\n\n\n\n

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    Value-Added Service<\/strong><\/u><\/strong><\/p>\n\n\n\n

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    Periodically, I will be sending out market analysis like this to my clients, as well as alerting them when the trading strategies I used indicated potential entry and exit signals. Click on the button at the bottom if you would like to arrange for a One-to-One Coaching session to learn more about trading futures & forex, and how you may benefit from the services I provide.<\/p>\n\n\n\n

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    Eric Lee is a Sales Director with Phillip Nova. With expertise in Futures, Forex, Stocks, and Unit Trust, Eric makes an all-rounded advisor. Make informed trading decisions without spending time combing through endless information as Eric readily provides clients with trade alerts and insights via WhatsApp. Over his years of experience, Eric developed systematic strategies in trading and investing. Book a complimentary coaching session below to leverage on his expertise as he imparts his knowledge to enhance your trading journey.<\/p>\n\n\n\n