Gold Is Running Higher
Axi | Feb 27, 2017 10:15
Originally published by AxiTrader h2 Key Takeaway/h2
Gold is up 12% since the low last December.
At the same time the S&P 500 is up a little less than 5%.
Viewed from a rational lens, in a world where great expectations exist for Trumponomics regenerative impact on the US economy and corporate profits that makes little sense.
What it speaks to however is the allure of gold in uncertain times. The question now is how far can this gold rally run.
h2 What You Need To Know/h2Gold has had a remarkable, and text book rally off the lows around $1123 an ounce in late December to the currently level just a little below $1257 an ounce. That's a move of around 12% against a move in the S&P 500 of just shy of 5%.
As a behavioural economcis and finance guy that's telling relative performance of what in many ways are assets which represent opposite sides of the Trump trade. Throw in gold's outperformance against interest rates and the US dollar and it's a sign that some parts of the market - some traders and investors - see large uncertainty in the global economy, politics, and markets.
It's not to say that a crash is coming, nor that president Trump will fail. It's not even to say that marine Le Pen will win the French election. It just highlights that some traders and investors see value in gold as insurance against uncertainty and a market shock.
Looking at the gold chart specifically, beneath all the Fibonacci levels, the waves up, retracements to support, and next move higher, there is a clear uptrend in price at the moment. Current levels, around $1256/7, satisfy the latest projection from the $1180 to $1245 which then retraced to $1220.
Overhead resistance at the 200 day moving average looms large at $1261 - many traders watch that as a signal of a bull or bear trend. Above that we have more Fibonacci levels in the $1269/79 region with the upper limit of the current uptrend around $1279 this morning.
If you strip back all the levels and look at the gold chart in an Alexander Elder TripleS style approach you see an uptrend. Resistance is sitting overhead everything else at $1300/05. Can it get there? It sounds like a long way away. But they so did this mid $1250 region when I started talking about it a few week's back.
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