Here's Why Louise Yamada Says Gold's Going To Break Out
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(Kitco News) - “You do have enough here to argue that gold can go higher.”
These were the words of veteran technical analyst Louise Yamada as she appeared on CNBC’s Futures Now Tuesday, when the metal rallied to levels last seen right after the U.S. presidential election last year.
Indeed, there are many factors working in gold’s favor right now.
For one, North Korea launched a missile over Japan’s airspace overnight, which pushed gold prices to multi-month highs. Likewise, the U.S. dollar is under pressure and investors continue to question the Federal Reserve’s ability to tighten monetary policy as well as President Trump’s reform plans – more positives for gold.
But what’s really catching Yamada’s attention are equity markets, which she said look “fragile.”
“What’s interesting about today’s action is that [gold]’s moving inversely to the [stock] market,” the managing director of Louise Yamada Technical Research Advisors said.
“If gold continues up here, it’s possible that we move more into a bit of a corrective trend in equities. There’s a lot here suggesting that equities are looking fragile under the surface and it would be logical to see equities pull back a little as we get a rally in gold.”
Stock markets were under pressure as gold prices broke out Tuesday. However, after clocking in an 11-month high, the metal has cooled off as equity markets recovered. December Comex gold futures lost recent daily gains and were heading towards a negative close, last at $1,312.10 an ounce, down 0.24% on the day. Meanwhile, the Dow Industrial Average and the S&P 500 moved in the green, last at 21,861.26 and 2,448.01, respectively.
However, the former Citigroup analyst isn’t giving up on gold just yet, noting that the metal is now “breaking out.”
“I think that gold can go higher. It could possibly get to the next level at $1,380,” she said. “$1,400 would be key resistance because that goes all the way back to 2014.”