Gold Leaps Above $1300

Gold prices broke and closed above a critical resistance level when gold traded past $1300 this morning. As of 430 EDT, the most active gold futures contract (December 2017) gained $9.30 on the day to close at $1305.80. Spot gold closes $9.70 higher on the day, trading to $1302.80.

According to the Kitco Gold Index (KGX), the net gain of $7.70 was almost entirely due to buyers in the market bidding up the precious yellow metal, with only $0.40 of the $7.70 being attributable to a weakening U.S. dollar. The net result of today’s respectable upside move is that gold gained over 2% in value this week.

Today’s upside spike is directly attributable to the U.S. inflation numbers that were released this morning. Coming in below expectations, today’s meek U.S. inflation numbers have caused market participants and traders to question whether or not the federal reserve will, in fact, raise interest rates in December.

As reported by MarketWatch, Peter Spina, president and chief executive officer at GoldSeek, said, “There are many triggers for gold, including the mix of economic data showing uncertainty of future growth to inflation, which would push the [Federal Reserve] to raise rates in a slower sequence. The market is questioning the future rate increase amounts and thus the stage is being set up for a much larger gold rally in the months to year ahead.”

On a technical basis, the former level of resistance at $1300 per ounce should now become a significant level of support. Just below that, the next technical level of support comes in at $1282.

Our technical studies also indicate that currently there is minor resistance at $1325 to $1329. Above that price point is major resistance, which is the highest value gold has traded to this year at $1360.

Although gold prices still have a way to go before breaching this year’s high, the fact of the matter is today’s price move above $1300 per ounce is significant, and the beginning of what I believe will be a very respectable rally culminating in a new price high this year for gold.

Wishing you as always, good trading,