Any market technician that is looking at the daily chart on gold futures is surely thinking that this market is ready for another leg higher, and is likely to test the $1,300 level next. Not only are traders seeing the “golden cross” where the 50-day moving average has just crossed above the 200-day moving average, but also today’s settlement price of $1,271.40 in the August contract is a positive. The bulls should be encouraged to buy now as the strength is being confirmed by the chart action of the past few days.
When it comes to owning gold, one can always find a reason. Recent US Dollar weakness, Trump’s politics, the geo-political climate, safe-haven trades in times of uncertainty, stocks are too high and way overdue for a meaningful correction, and on top of all this we are going into a long US Holiday weekend that also is the start of Ramadan. It doesn’t matter what the excuse is to own gold. The “gold bugs” are always bullish, and right now all the stars are in alignment to see prices jump. That’s enough for me. Technical strength is what brings new buying to the market. Gold is that rare commodity that continues to draw speculators to the market even as the price moves higher and higher. There’s no curbing demand with high prices in this market, and there’s no such thing as “too high” when it comes to gold. You can’t just turn the production back on, that takes time.
Aug ’17 Gold Daily Chart