Gold Prices on the Rise

 

Monday Oct 15th saw gold prices rocket to prices not seen since April of this year. As of Tuesday Oct 16th intraday the spot rate for gold was ~1229 down of its intraday highs. This places gold up ~4.5% since its low of ~1176.

On Monday the equity market saw another negative day across the broader indexes. While mild compared to the turmoil witnessed last week, investor jitters are still on edge. Market weakness is not the only driver that is propelling gold futures higher. The U.S. dollar has continued to see weakness this year. Coupled with a rising Fed rate which was raised to 2.25% late last month, and another rate hike planned for the end of the year, we could see the dollar affected even further propelling gold prices higher.

Gold along with precious metals in general, are viewed as a safe haven in times of uncertainty, and we have seen a lot of uncertainty in the US political spectrum. The trade war with China threatens to weaken the larger global economy. While, more recently, the dispute with the Saudi Government over the American journalist has caused further concern. A threat by the Saudi Government cautioned of an increase in the price of crude oil to over $100 a barrel. Crude Oil was up intra-day Tuesday ~72.01.

 

Technical Outlook

 

Gold Futures

Technical review of Gold prices show we could be heading higher. With the recent break out, another 2% climb will place us in the next bullish target price range of ~1250. This is the next resistance level the bulls will look to breach to affirm golds trend reversal. The 1250 range hasn’t been seen since august of this year, during which gold saw a decline of ~9.5% from the highs of mid April. As noted above, there are factors providing a tailwind for the precious metal market, specifically rising rates, fear of inflation, and uncertainty in the equity market all support golds trend higher.

On the reverse side, for the bears, we are looking at a price target of ~1200. This point is currently acting as support for gold prices. The resistance has been breached twice in the last few months but always trend higher. If this gold rally is just a bunch of hot air, it is very likely we will see the 1200 support point again this year, which would point to even further decline of the special metals market. Again, all eyes are on the US political spectrum and the dollar index for signs of where precious metal prices will trend.

 

Silver Futures

While gold typically gets all of the attention from investors, the silver market as well can provide indications of potential trends. Typically we see silver as a more volatile metal which can provide insight into investor activity. Tuesday, December Silver futures were down intraday to 14.68. Silver as well has seen a 4.5% increase since its lows of ~13.98 back in September. Silver is still down ~19% off its yearly high. Our resistance level for silver futures is the ~15.50 price range, this range was breached back in August as the entire metal market trended lower. Our support level will be the ~14.25 mark. Breaching either of these price points could indicate further trending in either direction.

 


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