Quick Take: Gold Climbs as Fed Minutes Loom
NEW YORK ( TheStreet) -- Gold has had a rough 2013 so far. Tomorrow's Federal Open Market Committee announcement will either provide a helping hand for the yellow metal or send it lower once again. Giving his take to TheStreet's Joe Deaux is Mihir Dange, an options trader with Grafite Capital.
There are several potential gold-moving events scheduled for this week, such as China's gross domestic product results and the Bank of Japan's announcement. But neither has as much potential to move the price of gold as tomorrow's Fed minutes announcement.
According to Dange, the last time Federal Reserve Chairman Ben Bernanke talked about the potential plans of tapering, gold prices plummeted about $250 over a relatively short period.
As for the rise today? It's likely just a combination of short covering ahead of tomorrow's announcement and some longs who are finally dipping their toes in the water.Gold has been in a trading range between $1,201 and $1,275, where Dange suggested buying near the lower end of that range and selling/going short at the upper end of it. He also suggested the use of stop-losses to limit risk. A break above or below either of those levels will likely signal the next wave of what's to come. Meaning a close below $1,201 and gold will likely continue lower; a breakout over $1,275 will likely signal an upward trend in the intermediate future. The trend gold will form is still unknown, although one thing's almost certain: The Fed's action will likely be what decides it. -- Written by Bret Kenwell in Petoskey, Mich. . Follow @BretKenwell
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