A few weeks ago I wrote an article which called for gold futures to test the $1,300 mark. I was lucky and the move happened fast -- and just as fast fizzled out.

As I was scanning the markets this morning, it was gold that caught my eye again. Here is what I see: Gold could test $1,207 area. If it does, it will be a good buying zone for longer-term move. This market needs to hold above and not close below $1,200 mark.

While the daily chart suggests possible break of support level and another leg down, the monthly chart generated a longer term buy signal these past few months.

Use futures to go long once the chart is holding support and buy put options as insurance in case that's wrong. I will wait for lower prices or to get a signal based on the daily chart that suggests selling is getting exhausted. To learn more about options, futures, risk and opportunities download this PDF booklet.

See daily chart below:

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And now to the much larger picture, the monthly chart:

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As you can see a bit of conflicting signals between the two. Red sell signal on the daily chart from a few days ago, buy blue signal and topaz from the last two months bars using the monthly chart. Another important factor to watch, is the CFTC commitment of traders report but that's a topic for another time.

This article is commentary by an independent contributor.

Trading commodity futures and options involves substantial risk of loss.

Past performance is not necessarily indicative of future results.