NEW YORK (TheStreet) -- Gold got a nice a pop Tuesday morning after the delayed nonfarm payrolls report for the month of September came in weaker than expected.
Paul Sacks, principal gold trader at Aurum Options Strategies, told
Joe Deaux the move seems to be a bit of an overreaction because there seems to be too much emphasis on the report and what it means for tapering.
He added that many market participants now expect the
not to taper its asset purchases until next March or June.
Sacks suggested a "perfect storm" was in place leading into this morning's news release: A poor labor report result and a lot of short-sellers in gold. The poor data report gave gold the pop that it needed and forced shorts to cover their positions, adding to the buying pressure.
He said gold has solid support at $1,250 due to strong physical demand at those levels. Previously, this support was at $1,180 and $1,200, so it's a bullish sign that it's moving up.
He concluded that it makes sense to get long gold, with potential stop-loss targets at $1,250 and $1,200, if they fail to hold as support. However, Sacks did caution investors there will be headwinds and, eventually, tapering by the Fed.
-- Written by Bret Kenwell in Petoskey, Mich.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein'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.