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Gold: Is This The Breakout?

Commentaries & Views

(Kitco News) - In my 45 years in the business, I have never been more uncertain. As readers of my commentary know, I have been very constructive on gold since the $1,280 low some months ago. I suggested that by summer the dollar would come under pressure because I was of the opinion the Fed would not raise rates in 2019, and were more likely to lower rates beginning in the summer. This action would take the juice out of the US$ and be positive for gold prices. Ok we are here, but even if the Fed lowers by 50 basis points in July, and currently only 25 basis points are priced in, the U.S. yield are still some 2% above global central banks. So if we look at technicals, the picture becomes even more murky. If gold breaks above $1,420, there is only air up to $1,465 and after that vapor until $1,600. We are currently not in a 2008 scenario, although gold may be telling us it’s an imminent occurrence. A war with Iran -- possible but not probable. What if Trump gets an Agreement with trade with China, later this week ? All this said, I think the odds of a retracement back to $1,360 (markets have a tendency to back-fill) or a break of $1,420 are both possible. Core holdings should be held. Traders: I’m taking profits as I go. If you want my side, I’d play from the short angle, but without conviction.

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