Gold Sector Ready to Shine After FOMC?

Many gold stocks are oversold and have set up bullish double bottom patterns on the daily chart. Most gapped up today and are acting bullish ahead of today’s FOMC announcement on interest rates at 2 ET. This bullish action suggests that the FOMC will not raise (since higher rates are generally bearish for gold stocks). Because gold (and commodities) are interest rate sensitive, expect them to be very volatile after the announcement (and typically through the following morning). However, if they close strong, many are poised to move higher on the daily chart (despite many monthly charts still being extended).

Bullish Option Trades in Gold & Silver Sector if Close Strong

With implied volatility in the sector remaining high, let’s review a number of bull put spread candidates based on the daily pattern if they close strong. There are many candidates. The idea is to sell a put (e.g., Oct expiry) under major support, and buy a protective put further out to limit risk (and margin), making it a bull put spread. Always make sure the spreads are liquid and tight, and place a stop loss under support.