February Gold, Is There A Correction Coming?Posted 12/01/2017 8:14AM CT |
Let’s just take a look at gold from a broad perspective. It’s had quite a roller coaster ride from high 12’s to low 13’s over the past few weeks. The big question is if there is a longer term broad trend forming. The first thing I would tell all traders looking at gold is remember why gold finds a bid in the market; in the end it is a safe haven asset! Gold will typically find support whenever there is a political or militarily destabilizing type of event in the world. Right now, gold is flirting with a lot of very key fundamental news. The biggest supporting factor is that the stock market is clearly in the stratosphere. It’s not an exaggeration at this point! There is no reason for the stock market to pull back at this point. Market sentiment hasn’t been higher, and all three stock indices are in record territory.
Gold will find a very strong bid when there is more volatility, and uncertainty. More pressure for gold can be found in extremely positive economic news which has been seen week after week. It can also be found in generally positive market sentiment, as the public finds that it’s difficult to trade against this trend.
There are reasons to be bullish gold, however. Tax reform is still not a sure thing with several senators expressing concern. There is also North Korea, laughably challenging the United States to a military showdown, and general instability in the world. If one thinks about Venezuela, the country that recently announced they might suspend sales of oil to the United States in retaliation for hostile political action. President Maduro doesn’t understand economics and should know that his oil would need to be sold to another country should this happen, and the void left in the USA would quickly be filled by others. This type of instability could drive gold higher, eventually. Any sort of washout in February gold below $1,270 will most likely see follow through selling. If you would like more information on how to play gold don’t hesitate to reach out directly at 312.373.5383.
Gold Daily Chart