Gold Trades to Highest Level This Year with Striking Similarities to Last Year
Gold prices traded modestly higher today, trading to a six-week high. This occurred after gold prices plunged from the highs of 2016 when gold traded to 1380 per ounce. The high reached last year was the pinnacle of a multi-month move, which began near the end of 2015 and the beginning of 2016. What is interesting is that we are now seeing some similarities between the beginning of 2016 and the beginning of 2017.
Will History Repeat Itself?
This brings up the real possibility that traders are witnessing a similar scenario seen at the beginning of last year. Gold prices had been under tremendous pressure throughout the 2015 calendar year, with prices culminating at a four-year low at 1050 per ounce. The low seen at the beginning of 2016 was the net result of a multi-year correction, which began after gold had reached its all-time record high of $1900 per ounce. The low that was achieved at the end of 2015 and the beginning of 2016 turned out to be the lowest price gold traded to since October 2009.
That same low would become the price point that would form a base price with critical support, and more importantly, the beginning of a multi-month rally, which took gold prices to the highest point last year at 1380 per ounce. From July of last year, up until December 2016, gold prices declined to lows not seen since April 2010, finally finding support at 1123. This low was achieved on December 15. From December 15, up to and including this week’s current pricing, gold has continued to accumulate more value, now trading at a six-week high.
Based on recent price action in gold, it is quite probable that the lows seen in December of last year and the beginning of this year could in fact be the lows of 2017. That occurrence would be very similar to the lows seen at the end of 2016, which turned out to be the end of a multiyear correction, and the lowest price point gold had traded to in the 2016 calendar year.
It is quite obvious that fundamental factors, which influenced the market last year, are entirely different than what we are looking at currently. However, there is a real possibility that we could have seen the lows in gold pricing this year. And in similar manner to last year’s activity, we will begin to see gold prices move higher for the first half of the 2017 calendar year.
Wishing you as always, good trading,