There are several reasons behind the upward move in gold over the past several weeks. The first and most obvious is the North Korean tension that continues to rattle markets and investors alike. The potential for a full blown conflict seems to be gathering steam as the largest bomb ever developed by North Korea, and over 10 times more powerful than the Hiroshima, was exploded. We expect North Korea to continue to threaten the US and our Allies with additional tests to come. NK is reported to be launching a full range ICBM, with no trajectory changes, on the country’s founding day Saturday September 9. The escalation could be steep if they were to launch in the general direction of the United States or any allies. On top of this, we also saw the jobless claims number come out at 298,000 vs the 241,000 as the consensus. This number can be attributed mostly to the Hurricane Harvey impact with over 50,000 additional claims coming out of Texas alone. We expect this number to continue to rise in the coming weeks causing the Federal Reserve not to increase interest rates for the remainder of the year. Non-yielding assets like gold will continue to move higher should economic data come out that is lackluster or below trade expectations.
A technical perspective will clearly point to higher prices in gold. We continue to stay in a nice upward channel, but are now clearly in overbought territory. It’s blown through all resistance that investors have been watching such as 1,325 and 1,350. It appears that 1,400 is now clearly in the cards.
Dec ’17 Gold Daily Chart