It’s no surprise that gold is taking a “breather” after adding $100 in premium in the first half of November. A bid of consolidation is in order before resumption of the rally. So far, $1,850 support has held up well, but a breakout above $1,875 is necessary to kickstart a secondary rally towards $1,900. In spite of US dollar strength, I still have a high degree of confidence that gold will continue to attract new buyers. As gold prices begin to move above $1,900 the buying will become more aggressive as “fear of missing out” will kick into high gear. You see, gold is that rare commodity that attracts more buyers at higher levels. When it comes to gold, higher prices do not curb demand like it does in other raw commodities, and we cannot just open the spicket and more gold pours out. It just doesn’t work that way.
Silver has been lagging and I don’t expect that to last much longer. Silver has struggled to punch through $25.50, but once it does, silver will rally very quickly towards $28.00.