Gold Flirts With $1300 Per Ounce but Remains Dateless

Gold continues to gain value as traders and market participants glean the minutes from last month’s FOMC meeting which were released yesterday. The probability of an interest rate hike in December remains high, an 87% probability based on the CME’s FedWatch Tool. This occurs in light of a U.S. equities market that continues to break records and close at new all-time highs.

According to Peter Hug, Director of Global Trading for Kitco Metals, “Release of the Fed meeting minutes yesterday indicated a lack of unity on the speed and aggressiveness of Fed rate hikes. Comments indicated a concern about the level of inflation, the key metric for higher rates. The Fed seems perplexed on the stubborn, below-target, inflation numbers, and the minutes showed a growing divide between the voting members on when and how aggressively the Fed should tighten.”

Gold futures gained $6.50 on the day to settle at $1295.50. Spot gold gained $1.50 today to settle at $1292.60. This took gold pricing to the highest value seen over the last two weeks. Once again gold has flirted with $1300 per ounce, trading to $1299.80 intraday, only to back off and close nominally below that price point.

Even though gold prices are trading just below $1300 per ounce, Dennis Gartman believes that it could trade higher, and is likely to hit $1400 per ounce.

In an interview with CNBC’s Futures Now, Gartman said, “One currency that will probably do best of all is gold. Gold has been rallying in dollar terms. It has been a bull market since December. And it is still a bull market.”.

During the interview, Gartman recommended that market participants utilize these lower gold prices to their advantage and invest now. “If you are not long, you should use this weakness we have had in the past two weeks to be a buyer, no question,” 

As reported in MarketWatch, Tyler Richey, co-editor of the Sevens Report, was much less optimistic. “For now, $1,300 is magnetic in the gold market and futures are likely to oscillate on either side of that psychological level until the market makes a clear move either in favor of, or against, the reflation trade. The former would clearly be bearish for gold as rates would rise sharply and the latter would be bullish, allowing for a grind back towards the 2017 high in the mid $1,300’s.”

As traders and market participants continue to digest September’s minutes of the FOMC meeting and gauge the current geopolitical crisis with North Korea, there remains more potential room on the upside for gold prices to move to. However, we get ahead of ourselves, let’s see if gold trades and closes above $1300 per ounce.

Wishing you as always, good trading,