Opinion with Peter Hug
Gold Hits Two-Year Year High
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
(Kitco News) - In December, we suggested that the gold price was beginning to exhibit the same patterns we witnessed in 2016 and 2017, when gold began a significant uptrend in the first half of those years. The primary catalyst for this year’s stellar run has been the weakening dollar and Treasury Secretary Mnuchin’s comments that a weak dollar is a positive for U.S. growth. which has accelerated the dollar’s decline. The EU and Japan are not thrilled with a strengthening euro or yen, which will hurt their export trade, but other than direct intervention to slow the dollar slide, raising rates are not yet viable options. A weaker dollar also suggests possible acceleration in the inflation data in the U.S. as higher prices for imports and rising commodity prices driven by the weaker dollar should work its way into the economy. It is unlikely the Fed will be aggressive in the first quarter of 2018, with the equity markets at lofty valuations. The key level which we pointed out after gold broke the $1,322 level was the double top of $1,365, which the market achieved in 2016. We hit that mark in overnight trading. This level is key for the next leg higher and a break through the 2016 top suggests a print of $1,425. At this level, a flat position is suggested, with re-entry on an upside break. Support lies at the $1,345 area.