Quick Take: Sidelined on Gold Into Friday
NEW YORK (TheStreet) -- After its worst quarterly decline of all time, gold has finally found a bid -- for now. TheStreet's Lindsey Bell spoke to Eric Zuccarelli, taking a closer look at the yellow metal ahead of Friday's jobs report.
With the drop below $1,200 per ounce, gold faced a capitulation moment, when it rallied hard during Friday's session to close well above the sub-$1,200 lows it made earlier in the session.
While starting the third quarter of 2013 with a bang, up 2.6%, Zuccarelli cautioned investors that there are still a lot of negatives for gold going forward. Although he says the the $1,200 level should hold, we may soon see a retest of it. Especially with the
Federal Reserve
looking to withdraw its stimulus program, which was one of the main reasons to hold gold.
Pending a huge spike in inflation, reasons to hold the precious metal are dwindling. The world recovery is gaining traction and global events don't seem as bad as they once did.
Going into the nonfarm payrolls report on Friday, Zuccarelli expects gold prices to remain muted. Because of this, staying on the sideline is probably the smartest move, especially if traders have missed both the upside and downside move in gold.
"I would be a seller on rallies and be bearish on gold, as opposed to being a bullish buyer on a dip," he concluded.
-- Written by Bret Kenwell in Petoskey, Mich.
Bret Kenwell currently writes, blogs and also contributes to Rocco Pendola's Weekly Options Newsletter. Focuses on short- to intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.