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Three Reasons To Be Bullish On Gold

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After pushing up to $1356/oz in mid-February gold futures performance have produced lackluster results. However, I believe two fundamental factors and one technical factor are about to change the course for gold.   I’ll start with the fundamentals and show you the technicals below.

The FOMC is continuing to produce increasingly dovish comments removing the Fed-dot forecast from two interest rate hikes in 2019 to zero hikes while penciling in just one hike in 2020. If you look back six months ago the FED was considering three hikes in 2019 so we have seen a dramatic change in the FED’s tone.

Secondly, central bank purchases of gold have been at record pace and show no sign of stopping. China for instance has increased reserves from 60.62 million ounces in March from 60.26 a month earlier and is the fourth straight month of gains. Russia has also stepped up purchases as they are attempting to move away from holding dollars.

With tariffs, trade wars and Brexit there’s no benefit to holding a diversified basket of currencies if you are not going to trade with other partners so you might as well reduce foreign holdings and put the money in an asset that has a store of value. 

Before we dig into the chart pattern, if you haven’t ordered a complimentary 2019 Hightower Commodity Trading Guide & Calendar, we will have some of these available to send out. This is your “go-to” resource for Government & Industry Report Dates, Futures and Options Expiration Dates and more than 350 charts and graphs. *Available to U.S. residents only.

You can request yours here:  2019 Hightower Commodity Guide

If you haven’t received yours, send me an email as some were returned for incomplete addresses

Daily Gold Chart and Price Outlook

The chart above are from provided by RJO Futures PRO, an exclusive and sophisticated online trading platform with integrated tools to seamlessly trade and monitor the markets. You can demo the platform here RJO PRO Demo

Analysis and Outlook

The daily gold chart has created one of the best chart patterns I have seen in years. This is a standard double bottom classic “W” pattern. Generally, what you want to see is a move back through $1330/oz which could spark a rally back up to $1350/oz. Caution should be exercised at the first level of support the 100 DMA at $1295.3/oz and/or second support the double bottom at $1285/oz. depending on your risk tolerance.

If you would like assistance with technical analysis I highly recommend that you register for our new guide  Top 5 Technical Indicators for Futures Trading

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.