Over the past month, the price of gold has remained in a narrow $28 trading range. It’s moved between a low of $1,269, on Nov. 3, and a one-month high of $1,297, just last Friday.
As soon as the gold price drops toward $1,270, buyers step in. And once it approaches $1,290, sellers take over.
Still, the Nov. 3 low of $1,269 has held up so far, and the metal has managed to consistently establish higher lows since then. This has led to an overall gain of 1.4% in November so far, with the metal posting a huge 1.8% rise just last week alone.
We see a similar pattern emerging in gold stocks. The VanEck Vectors Gold Miners ETF (NYSE Arca: GDX) – which tracks gold mining stocks – hit a bottom on Oct. 26, and then a higher low on Nov. 7
Liquidity moves markets!Click here to learn how you can follow the money.
Right now, gold sentiment is extremely bearish, and it’s little wonder. Stocks are at all-time highs, oil prices are near two-and-a-half-year highs, and Bitcoin just smashed through the $8,000 level.
Gold has become an afterthought as other areas of the market receive more attention.
But remember, this is exactly the kind of environment where new bull rallies are born. When the least number of participants are interested, that’s when assets tend to begin fresh ascents.
All of this should add up to a rally for gold prices through the end of the year. That’s why I’m giving readers my bullish target for the price of gold before 2018.
First, let’s take a closer look at last week’s 1.8% gain, which led gold to hit its highest level since Oct. 16…
Why the Price of Gold Climbed 1.8% Last Week (Nov. 10-17)
After settling at $1,274 on Friday, Nov. 10, gold kicked off Monday, Nov. 13, with a modest gain even as the dollar stabilized. The U.S. Dollar Index (DXY) – which pegs the dollar against the euro, yen, and other currencies – moved up from 94.39 to 94.49. This pushed gold prices 0.4% higher, to close the day at $1,279.
But the dollar sold off on Tuesday, which led the gold price even higher. The DXY dropped back below the 94 level, eventually falling to 93.83 by the end of the day. Although gold opened the day lower, at $1,274, it quickly rebounded to $1,282 by the afternoon. It ultimately closed at $1,283, for a 0.3% gain.
Here’s a look at the DXY’s performance last week…
Wednesday’s gold action was almost the complete opposite of Monday’s. The DXY remained stable, moving sideways from 93.83 to 93.81 throughout the day. Except, unlike Monday, gold prices dropped back below the $1,280 level. They eventually settled 0.4% lower, at $1,278, by the end of the day.
The metal had an uneventful session on Thursday, especially with the DXY largely flat yet again. The index saw a small bump from 93.81 to 93.93, which caused the price of gold to close at the previous day’s close of $1,278.
Urgent: Executive Editor Bill Patalon just saw something on his precious metals charts he’s only seen twice in 20 years. He calls it the “Halley’s Comet of investing” – and it could lead to windfall profits. Read more…
It wasn’t until Friday, Nov. 17, that gold price action really heated up…
That day, gold prices rocketed 1.5% on the day to settle at $1,297, logging a weekly gain of 1.8%. This was likely due to a combination of both the declining dollar and falling stock market. The DXY fell from 93.93 to 93.67 that session. Meanwhile, the Dow Jones and S&P 500 both fell 0.4% and 0.3%, respectively.
But the gold price today (Monday, Nov. 20) is erasing some of Friday’s 1.5% rise. The metal is currently down 0.6% and trading at $1,289.
Gold has been beaten down from its $1,351 peak on Sept. 12, but remember, it’s still up 12% so far this year. This is considered the hallmark of an early bull market – when an asset continues to rise but the average investor doesn’t even realize it.
I think the price of gold is set for a home-stretch rally in December. Here’s how big I think that rally could be…
My Bullish Target for the Gold Price Before the Start of 2018
Last Friday’s one-month high of $1,297 was important for a big technical reason, which you can see in this chart here…
Friday’s settlement was close to the Oct. 13 high of $1,305. If the gold price can rise above that level in a sustained way, it may be the turning point gold bulls have been waiting for.
And not only did gold close above its 50-day moving average of $1,291, but the metal’s Relative Strength Index and moving average convergence divergence momentum indicators (highlighted above) have also turned up.
I like to look at gold compared to the DXY, since it gives me a snapshot of the metal priced in a basket of some of the most widely used international currencies…
As you can see, the price of gold has been gaining when compared to the DXY. In other words, gold has been rising against many important currencies, particularly the dollar and the euro.
Another interesting bullish sign for gold involves Ray Dalio. The founder of Bridgewater Associates – one of the world’s largest hedge funds – has been buying a lot more gold lately…
Recent SEC filings show Bridgewater owns nearly four million shares – or $470 million worth – of the SPDR Gold Trust ETF (NYSE Arca: GLD), which reflects the gold price’s performance. The firm also bought 11 million shares of a similar fund – the iShares Gold Trust ETF (NYSE Arca: IAU) – worth another $139 million. All of this is on top of holdings that Bridgewater already had in some of the world’s largest gold miners.
With bullish sentiment starting to take shape for gold, I still think it has a reasonable chance of regaining the Sept. 12 high of $1,351 before 2018. That would be a 4.8% gain from today’s price.
Up Next: Rare Gold Anomaly
Money Morning Executive Editor Bill Patalon just caught something on his gold charts that he’s only seen twice in the past 20 years. A $13 billion gold anomaly he calls the “Halley’s Comet of investing.”
It’s very rare, and fleeting, and Bill sees things lining up perfectly to bring some very sizeable precious metal profits to well-positioned investors.
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 Could Push Higher from Last Week’s 1-Month High 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.