Gold To Obliterate The $1350 Resistance Level

Feb. 26, 2019 1:00 PM ETGLD, IAU, PHYS, SGOL, UGLDF, UGL, DGP, GLL, GLDI, OUNZ, DZZ, DGL, DGLD, DGZ, BAR, GLDW, UBG, QGLDX, AAAU, GLDM, IAUF, PHYS:CA60 Comments
Bob Kirtley profile picture
Bob Kirtley
2.74K Followers

Summary

  • This resistance level needs to be obliterated with some gusto and gold needs to find the traction to take out the next resistance level before making new highs.
  • A lot depends now on monetary policy easing by the Federal Reserve which would weaken the dollar and due to its inverse relationship with gold, strengthen gold.
  • Now is a good time to invest in gold and silver and their associated mining stocks as once this train leaves the station prices will move quite quickly.
  • The good quality stocks that are well managed, in geopolitical stable areas, with low production costs will outperform in this coming bull market so short list them for acquisition purposes and act now.

Background

It feels like a distant memory since gold traded at the heady heights of $1900/Oz, since then the bears have been in control and gold has been savaged along with the associated mining stocks.

However, since 2016, gold has been making somewhat of a comeback and is now trading close to $1350/Oz. This is a level that it has tried to pierce on 6 or more occasions and failed as each rally ran out of steam, they were head fakes disguised as a rally. This resistance level needs to be obliterated with some gusto and gold needs to find the traction to take out the next resistance level which is $1400/Oz before there is more or less a clear run to $1800/Oz and then new all-time highs of $2000/Oz and beyond for gold.

A quick look at the gold chart

http://gold-prices.squarespace.com/storage/Gold%20Chart%2026%20February%202019.jpg?__SQUARESPACE_CACHEVERSION=1551151973911

The above chart shows the resistance $1350/Oz in red and also shows in blue squares the number of attempts it has made over the last 5 years to breakthrough this resistance and failed.

The technical indicators are in the overbought zone and suggest that a short-term pullback could be on my cards, but don't count on it as these indicators can stay that way for some time and corrections can be shallow.

Conclusion

Gold needs to vault over the $1350/Oz level and then $1400/Oz in order to get a clear view and run at the $1800/Oz level before going on to make new all-time highs.

A lot depends now on monetary policy easing by the Federal Reserve which would weaken the dollar and due to its inverse relationship with gold, strengthen gold.

As we write, gold prices are standing at $1327.00/oz, so a rise of a mere twenty bucks or so will make it ‘game on’ for gold bugs.

This article was written by

Bob Kirtley profile picture
2.74K Followers
Bob Kirtley has traded options and stocks since 1980. Bob Kirtley spent many years working on Oil projects including some in Alberta, such as the tar sands installations in Fort McMurray. He lived and worked in many different countries, as that is the nature of the construction business. Planning and cost control are key to a projects success and he tries to apply those disciplines on a daily basis when dealing with investments. His training in such areas as SWOT and Risk analysis can be applied from time to time. His qualifications include being chartered in the United Kingdom, which is similar to that of a Professional Engineer in Canada, along with a Masters Degree in Project Management from South Bank University, London, England. He has been working for a number of years on a full time basis representing a group of investors in England.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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