Gold Prices Inch Back Towards $1300 per Ounce

August 21, 2017 - 6:00pm

 by Gary Wagner

Gold prices continue to rise this week, trading to an intraday high of $1299.70. As of 3:30 EDT, gold futures are trading up $5.40 at $1297. The net gains of gold in 2017 are now residing at around 11%. Many analysts believe a break above 1300 will be significant and signal a further rise in the precious yellow metal.

Higher gold prices today were the direct result of a combination of a weaker U.S. dollar and traders bidding up the precious yellow metal. Spot gold is currently trading up $6.60 on the day, currently fixed at $1290.80. According to the Kitco Gold Index (KGX), a weak U.S. dollar is responsible for $4.40 of today’s gains, with the remaining $2.20 attributed to buying in the market.

As reported by Bloomberg Markets, Matt Maley, an equity strategist at Miller Tabak & Co., wrote a note to his clients stating, “Gold has rallied during the recent market setback and is now testing its key resistance level of $1,300. That is the level that stopped rallies in both April and June, so if it can finally break above the level in any significant way, it’s going to be very positive for the yellow metal.”

This statement is certainly in alignment with the most recent COT (Commitment of Traders) report put out by the Commodity Futures Trading Commission (CFTC) each Friday, which showed that net bullish bets on gold are the highest since October.

Ulchi-Freedom Guardian War Games Begin

The annual military exercises, jointly sponsored by South Korea and the United States, began today. These military exercises are purely defensive according to South Korean President, Moon Jae-in. However, they are viewed in quite a different light in the eyes of the North Koreans. In a statement released by the North Koreans today, they labeled the current exercises as a reckless step towards nuclear conflict.

According to North Korea’s news agency KCNA, “This is aimed to ignite a nuclear war on the Korean Peninsula at any cost.”

Continued concerns about North Korea’s desire to become a nuclear power, with the ability to strike the United States, continues to grow. This in light of the fact that United Nations sanctions do not seem to have had any major effect on North Korea’s exports.

According to Reuters, a confidential United Nations report found North Korea evaded UN sanctions by “deliberately using indirect channels” to export ban commodities and has generated 270 million between October 2016 and May 2017. In a report by independent U.N experts who monitor sanction violations for the U.N Security Council, it was noted that “lax enforcement of existing sanctions and Pyongyang’s evolving evasion techniques were undermining the United nation’s goal of getting North Korea to abandon its nuclear and ballistic missiles program.”

These annual military exercises between the United States and South Korea have evoked strong responses from North Korea in the past. Last year North Korea successfully test fired a submarine-launched ballistic missile during the drills.

Furthermore, during this year’s war games in March, North Korea launched four extended range Scud missiles into the sea.

It is widely believed that this year’s exercises will elicit some type of response from the North Koreans, but how severe this reaction will be is yet to be determined.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

Last Wednesday we sent out a trade alert: Dec Gold currently @ 1283.7 up $4.00. Buy @ market Stop Below 1270

Maintain long gold @ 1283.70 Maintain stop below 1285

TRADE ALERT: Today we are recommending that you raise your stop to just below 1285

Gold Market Forecast

Over the last 3 trading days, gold has had an intra-day low of 1286. That is the reason we are raising our stop to below 1285