December gold has seen quite the run up over the past few weeks, due mainly to the looming crisis on the Korean Peninsula. Even as we speak, December gold is making attempts to push the envelope to break out of the all-important and psychological $1,300 level. Looking at other fundamentals, we have seen mixed economic data in the US, with the Fed now discounting a potential rate hike in December at just 34%. If the US economy can stay on track and see a continued push toward 2500 on the ES and 23000 on the YM, we could see a jump in the chances of a rate hike. The Fed is unlikely to force anything through without a clear and direct strategy in raising interest rates. Four rate hikes next year now seem unlikely given the current circumstances. The biggest driver for gold at this point is clearly the North Korean issue. Massive change and uncertainty almost always leads to a rally in gold.
If you look at this from a technical perspective, December gold is clearly in overbought territory. Having said that, this could be just the beginning. Plenty of buy stops are looming just above $1,300. Along with this potential ammo is the chart pattern clearly showing a classic cup and handle pattern. A clear “U” shaped bottom, coupled with a slight pullback forming the handle. Look for a break above $1,300 to decide your next move.
Dec ’17 Gold Daily Chart