Multiple Factors Move Gold to Higher Ground

January 9, 2017 - 4:57pm

 by Gary Wagner

In active trading, gold futures closed higher today at 1183.80 as of 3:15 EST, up approximately $10.50, a net change of almost 9/10 of a percent. Although there was no new fresh fundamental news, a multitude of factors were cited as primary reasons that gold moved higher in trading today.

US Dollar Weakens and Increased Investor Demand, Including Chinese New Year

The US dollar traded lower today, losing a ¼ % in value. According to the Kitco Gold Index, a weak US dollar accounted for $2.90 of today’s rise, with the remainder ($8.60) directly attributable to buying in the market. Multiple reports indicated that capital is once again moving into gold exchange traded funds (ETFs), this according to the Kitco News. Add to that renewed Chinese interest in gold, and we have the perfect storm for higher pricing in the precious yellow metal. According to Bloomberg News, increased demand from China emerged in the gold pits today, as the beginning of their New Year celebration occurs later this month.

Less Than Two Weeks and Counting

Lastly, the Federal Reserve also emerged on the radar today. Whether it is questions about the Federal Reserve under a Donald Trump presidency and what changes that might bring, or questions as to the aggressiveness of the Federal Reserve this year in regards to rate hikes, concerns continue to be raised. These questions continue to be unanswered. With less than two weeks until President-elect Trump is inaugurated, questions about his monetary policies and stimulus create uncertainty as to how the Fed believes it will handle interest rate hikes this year. Whether the Fed will have to adopt a more aggressive stance cannot be answered until sometime after the inauguration, when policies begin to be implemented.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Gold Forecast: Proper Action
Last week Thursday,  we sent out a special trading alert recommending the initiation of long positions in both gold and silver.
We also suggested that you hold back half of your trading capital to add to the posistion on a dip, or sustained rally.
 
Maintain current long gold at 1180. Maintain current stop under 1140.
 
Maintain current long silver at 16.65. Maintain current stop under 1592.
Gold Market Forecast

On a technical basis it is the intraday low which is most important to us today. Traders moved gold pricing to an intraday low above 1172.

This is significant because we have identified a critical level of support at 1172 which is a 61% retracement of last year's yearly range.

Based on activity over the last three days it seems clear that there is a high probability that a level of support on a technical basis has formed their.

Based upon that and today's higher close in both gold and silver, our recommendation is to maintain our current long position as well as our stop.

Trending Markets Forecast

Editor’s note: this week we will be streamlining our delivery of the trending markets module and will incorporate it into the daily gold forecast video for those that have signed up for the additional service.  

You will see the additional markets commentary contained within a single report.