From the Trading Desk
After failing two days in a row at its 200 day moving average, gold finally decisively broke through it yesterday and made impressive gains. Shorts scrambled to cover positions as the 200 DMA gave way and gold closed right near the highs of the day. With gold having broken out of a key technical barrier, investors and traders helped continue the upward momentum today as they lifted the market even higher. The next target in gold is now $1,190, the previous high from October 2015 as well as the high dating all the way back to June of last year. While the market has clearly made some noteworthy moves over the last few days, I’m not overly excited just yet. I feel like the only constant in the market over the last few years has been that any drastic move in the precious metals has been short lived, lacking follow through and ultimately disappointing investors. Given that equities have performed so poorly this year so far though, perhaps gold’s recent gains will put it on the radar of mutual funds and institutional investors whose returns in more traditional assets have been underwhelming. These would be the kinds of new players to the market that would have the potential to give gold extended gains over the coming months.
While the Trading Desk analysis has their viewpoint, mine is simply dollar weakness. The dollar got clobbered again today but as I type is up 6 cents. There is no way Abe or Draghi will let their currencies climb. They just can’t have it.
See yesterday’s Current Thoughts for further analysis.
I do see the dollar over 100 and higher and the Euro down to par with the dollar at 1.00. This should still put pressure on gold along with the deflationary contraction that is still to come. I may stand alone on this but I have been here before. No, we are not taking off with gold. Not yet.
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About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.