In this particular case, I'm looking to sell short call vertical credit spreads on strength and sell short put vertical credit spreads on weakness and am keeping an eye on two areas: the "strength" area around 1190 and the weakness area around 1050 in XAUUSD to setup up credit spreads in GLD or in one of the other cheaper XAUUSD proxies -- GDXJ or GDX . (Although there is some argument to be made that a valid strength area would also be around 1160).
In comparison and contrast to trading the underlying directly, however, I'm not necessarily looking for price, for example, to strike 1190 to sell a short call credit spread. Rather, I'm looking for XAUUSD to express sufficient strength such that I can sell a short call vertical for a reasonable credit with strikes above that strength area -- naturally, the more strikes the better such that I either (a) have a reasonable shot at the spread expiring worthless; or (b) getting me out of the spread at 50% max profit at some point prior to expiration.
In the "short term," XAUUSD looks to be of a consolidative mind around that late July "dump zone" around 1100 and is expressing some difficulty making its way past 1100 to the upside or falling apart in tatters back toward 1050. But my hunch is that I'm going to entering short put credit spreads below that 1050 area before short call credit spreads above 1190 (or 1160 if it turns out that is a longer-term area of resistance than initially anticipated).