Why the Price of Gold Is Up 2.2% This Week, and Where It’s Headed Now

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

Precious metals are doing their job this week, as global security tensions are on the rise.

The short-term peak and then consolidation for the price of goldthat I expected last week seems to have come and already gone.

From July 28 until Aug. 3, gold prices plateaued at about $1,268 an ounce, then corrected the next day to the tune of $13. And that only lasted about three more trading days.

It’s showing another decent rally now, even as the dollar has shown some resilience. In morning trading, the price of gold today (Friday) is up marginally to $1,286.

price of gold

Of course, we have Donald Trump and Kim Jong Un rattling their sabres to thank for higher gold prices.

It’s been a tit-for-tat series of back-and-forth threats, and gold has reacted as expected: gold up, stocks down.

But I think that even if the situation quiets over the coming days and weeks, gold could still be poised to shine.

Here’s a closer look at how the price of gold has been trending this week, plus where I see the precious metal heading from here…

Why the Price of Gold Is Up 2.2% This Week

Gold ended the last trading week on Friday, Aug. 4, on a sour note, with sellers getting the upper hand. That day, the U.S. Dollar Index (DXY) rose around 8:00 a.m., then rallied hard from 92.80 to 93.70 over the next two hours. Gold traders sold wholesale, pushing gold prices from $1,267 at 8:00 a.m. way down to $1,256 by 10:00 a.m. The little strength gold had left pulled it back slightly higher to close at $1,258.

Life-Changing Profits: This investing strategy has racked up 28 triple-digit wins so far this year – and 44 in the last 12 months. To learn how to get in position for the next one, click here now…

That set the stage for Monday, Aug. 7, when gold opened at $1,256 and moved mostly sideways on little actionable news. The DXY remained stable on Monday as well. So by the end of New York trading, gold had managed to gain only $1 to close at $1,257.

Tuesday held more action as the dollar rallied in the morning. Gold had been rising in early morning trading, reaching as high as $1,264 by 7:00 a.m. But by 10:00 a.m. as the dollar rallied, pulling the DXY from 93.30 to 93.70 at 11:00 a.m., gold started to sell off. It lost $11 to reach $1,253 by 11:00 a.m. But the DXY gave up about half its gains, and gold buyers stepped back in, bidding it back up to $1,261 by end of day.

Here’s a look at the dollar’s action over the last five trading days…

price of gold today

On Wednesday, it was all about “fire and fury like the world has never seen,” as President Donald Trump warned North Korea against its hostile threats. Gold prices had been gaining overnight and in early morning trading, managing to open at $1,269, then gapping higher to $1,275 at 9:00 a.m. as reports of Trump’s comments emerged. Here’s how that looked…

gold prices

And after a brief retreat, the price of gold headed higher to close at $1,277.

On Thursday, global stock indices followed through in a big way on Tuesday’s selling, with the S&P 500 losing nearly 1.5% and the Dow nearly 1%, while the VIX shot up an astounding 44% in one day. Gold delivered in spades, rising overnight and early morning to open at $1,282. It peaked at 10:00 a.m. near $1,287, then settled back to end the day a touch lower at $1,286.

Now that we’ve examined this past week’s moves, here’s what’s next for the price of gold in 2017

Where the Price of Gold Is Headed from Here

Now that gold’s gotten a major boost thanks to high geopolitical tensions, what’s its next move?

Well, first consider that gold’s 200-day moving average has just flattened out and ticked up slightly. On a longer-term basis, this suggests gold’s resuming its bull after correcting in the second half of 2016.

gold price

The other point of note is that both the RSI and MACD momentum indicators are confirming gold’s recent rise, and both have room to head higher.

I think the real test from here will be $1,300. Gold approached that level twice this year, in April and again in June, and both times reversed. Will the third time be the charm? We’ll have to wait and see. But if the recent stock sell-off snowballs, and given this is a strong season for gold, my bet would be $1,300 soon becomes support rather than overhead resistance.

Consider that “Bond King” Jeffrey Gundlach recently tweeted that he was bullish on gold and continued to be bearish on stocks as well as U.S. Treasuries. He’s been a long-term bull on this precious metal, calling it a bargain relative to stocks.

As well, the World Gold Council just said in its second-quarter report that bar and coin investment in Q2 was up 13% year over year, and jewellery demand, especially from India, pushed Q2 gains up 8%.

So overall gold’s looking pretty robust. Let’s keep a close eye on $1,300 for clues to gold’s next move.

To get full access to all Money Morning content, click here

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

Disclaimer: © 2017 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.

The post Why the Price of Gold Is Up 2.2% This Week, and Where It’s Headed Now appeared first on Money Morning – We Make Investing Profitable.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.