Since the last all-time high of $1,900/Oz made in 2011, Gold Bugs have taken it on the chin as gold fell from grace resulting in many investors leaving this space in search of greener pastures. In recent years, gold has levelled out and is indeed shaping up for a comeback as it once again eyes the near-term resistance level of $1,350/Oz.
For many investors breaching this level won't be good enough to tempt them into parting with their cash, it will take something more substantial like a weekly close above $1,450/Oz. And that is only the point that they start to think; preparation, raising funds, the selection process when considering precious metals stocks etc, will all take a little time. However, the gold train will be moving, and they will get on board in order to partake in the upcoming rally. New investors bring new money and add to the momentum that has already started accelerating prices to new all-time highs.
A quick look at the Gold Chart
Gold has been unable to break through the resistance level of $1,350/Oz and as the chart depicts once again, it has failed in its attempt to break free and put in a decent rally. The technical indicators, RSI, STO, and the MACD are now in the oversold zone suggesting a near-term recovery.
A quick look at the USD Chart
Over the last 5 months, the dollar has struggled to get above the resistance level of 97. The technical indicators were suggesting that another challenge was on the cards and sure enough, it arrived mid-week when it closed at 97.63. If the dollar can hold onto these gains, then there will be more downward pressure on gold due to the dollar/gold inverse relationship.
The question is can it stay there and cap gold's advance; we doubt it, but this battle has to be won by gold in order to gain credibility with investors.
The absence of rate hikes in the US will become apparent as this year progresses and the demise of the dollar will be considerable. Given the dollar's inverse relationship with gold, its fall will be supportive of gold prices.
The demand side for gold has improved as Central banks are buyers once again.
Gold and silver are becoming more and more difficult to find and mine which means supply cannot suddenly be increased to satisfy the increased demand.
All in all, the upward pressure on the precious metals sector is steadily increasing which should result in a sparkling future for those who are positioning themselves now to take full advantage of this upcoming bull market.
You must have a comment, so please add it to the commentary, as the more diverse comments we get, the better informed we all become making our trading decisions more profitable.
If you are not already a Follower and wish to see our posts on gold, silver, and the associated stocks, then please hit the follow button in order not to miss out.
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.
Additional disclosure: www.gold-prices.biz makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents our views and replicates trades that we are making but nothing more than that. Always consult your registered adviser to assist you with your investments. We accept no liability for any loss arising from the use of the data contained in this letter. Options contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. Past performance is neither a guide nor guarantee of future success.