Gold Consolidates as it Finds Support, Palladium Closes at a New All-Time High

Gold futures are trading fractionally higher on the day. As of 4:40 PM Eastern standard time the most active April Comex contract is currently fixed at $1331, which is a net increase of $1.50 (+0.12%) on the day. Spot gold is exhibiting roughly the same net change, and is currently bid at $1328.30.

Today’s fractional move in gold is entirely based upon dollar weakness. Which is Currently fixed at 95.905, boding a net decline of .366 points, or -0.38%. According to the KGX (Kitco gold index) dollar weakness has contributed $4.90 of gains. However, after factoring in selling pressure which is taking gold down $3.70, spot gold has only gained $1.20 on the day.

Most evident in recent price action in both physical gold as well as gold futures is that this current rally has not seen any sizable correction or retracement. Rather the characteristics of this rally is composed of a series of price spikes, followed by periods of sideways consolidation at the new higher price level. This type of rally underscores the bullish market sentiment which continues to be prevalent and stretches across the entire precious metals complex.

Another impressive characteristic of this recent rally is that it is occurring in tandem with a fairly strong risk on market sentiment favoring U.S. equities, as well as continued dollar strength which has limited price gains in gold.

Today’s dovish testimony to the house by Fed Chairman Jerome Powell contained statements regarding future rate hikes as well as current monetary policy. But had little effect on Gold prices. In his opening statement he underscored that the Fed remains sensitive to data and will continue to have a “wait and see attitude” in regards to future rate hikes.

The fact that at the end of January Chairman Powell announced the Fed would discontinue using an autopilot timeline to reduce their assets is extremely dovish. More so, he announced that although the balance sheet remains above $4 trillion, the Fed would continue to hold $3 trillion on their balance sheet for an undetermined amount of time. This revised monetary policy will be supportive of gold pricing.

To Infinity and Beyond

Of course, palladium pricing will at some point find resistance. However, at least for now it seems as though it’s on a parabolic trajectory taking it to infinity and beyond. Over the last two trading days Palladium pricing has gained a little over 5%. Yesterday Palladium gained $46, a 3% gain. Followed by today’s upside spike resulting in a price increase of almost $31, a net gain of 2.06%. Palladium futures are currently fixed at $1526.90 after trading to a high of $1529 today. In as much as recent gains in palladium have been astounding and substantial, historically speaking we have seen palladium prices drop in the same parabolic manner as it rose.

Our technical studies which initially forecasted palladium prices to reach $1500 per ounce, has now come to fruition and surpassed that price point the next real level of major resistance does not occur until $1662 per ounce, which is a 1.618 extension using the last two major rallies for distance as well as a starting point.

Wishing you as always, good trading,