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New Month, New Quarter; What's New For Gold?

Commentaries & Views

Gold has been consolidating for months. In fact, the entire first quarter was traded in a big range. Gold never broke out to the upside or broke out to the downside. There have been many false starts in both directions, but each time, gold came to that key moment it reversed and went the other way.

There is no end in sight for this wide consolidation pattern, but it will break out one way or the other; the only question is when. For now, the trade is to sell the top end of the range and buy the bottom end. That trade will work until it doesn’t. Market patterns repeat themselves over and over again, looking for a reason to break out either way.

The economy and the dollar will be contributing factors to which way these markets will break out. We expect a much stronger dollar, which typically would be bearish for gold. However if the dollar becomes the black-swan event, we expect it could be positive for gold. This is why the metals remain in consolidation, searching for a reason to break out. Let the footprints be your guide and wait for the breakout in either direction.

Keep those stops tight.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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