As a long-term bull market in gold is underway it is important to keep an eye on the critical levels of support and resistance. For those of you holding physicals or investing in non-leveraged products these twists and turns might not mean as much as someone using futures which allow speculators to use leverage to control an asset. At the time of this writing the initial margin on December 100 oz. gold futures is $4950 and maintenance is $4500. This means for $4950 you can control 100 oz. of gold and as an example if you used a spot price of $1500/oz. you are controlling $150,000 of gold for $4950. So with that kind of leverage it becomes essential to pay attention to critical levels and remember that there are 50 oz., 33 oz. and 10 oz. contracts with lower margin requirements so when using leverage, use a product that you are comfortable handling the daily fluctuations.
The best way to get a gauge of the average true range of gold on any given day is to download the RJO Futures Pro platform, load a daily chart of gold and apply the study “ATR”.