Gold Prices Consolidate
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Gold has been under pressure the last few weeks and is now consolidating at lower levels. It appears that the lows are in for now and the next move will be higher. There have been many excuses as to why gold has been trading lower, with one being the strength of the U.S. dollar. If that's the case, we would ask why gold was weak as the dollar was collapsing from 103 to 88.
When looking at any market, traders and investors try to find correlations. Unfortunately, that is more often than not the case. All markets trade in different phases and although there is a direct correlation between commodities and the dollar over time, they are related during different cycles.
Markets and charts leave clues and footprints, and the footprint in gold is consolidation at the bottom, indicating a rally is forthcoming. The sellers appear to be on their way out, leaving room for new-money buyers to step in. The blow-off to the downside on May 22 indicates a bottom has been achieved. There is no guarantee that the bottoms are in and gold can still go either way; however, probability favors a rally from here.