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Today, we’re opening a new bullish trade on the SPDR Gold Trust ETF (NYSEARCA:GLD).
After flirting with yields above 3%, the 10-year bond is starting to cool off. Traders are likely to use this as an excuse to call a top in the dollar as well. Both a weakening dollar and flatter yields in the short term should be good for gold.
We like GLD calls at this level as prices meet support near $124 per share. Our initial target is the top of the current channel near $128. A breakout to a higher high is possible, but we think a more conservative approach is best in this market.
The options are relatively cheap currently (low implied volatility), so we don’t need as much upside to make a profit.
‘Buy to open’ the GLD June 125 Call (GLD180615C00125000) for a maximum price of $2.10.
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