Hawaii Six O - Gary Wagner
Even a Half Day of Trading Does Not Stop Gold from Spiking Higher
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Although today was a short day in trading with the markets closing at 2 o’clock EST, that did not stop traders from taking gold higher. Over the last two days we have seen gold gain of us $25, after factoring in today’s gain of over $15 per ounce. That being said the last two days have met the criteria we have been waiting for to determine if gold pricing would break out of its sideways trading pattern that has been so prevalent over the last three weeks.
Most noteworthy on a technical basis was the fact that gold broke above the 100-day moving average, above the 23.6% Fibonacci retracement level, and finally most importantly above the compression triangle, or pennant formation that we identified over the last two weeks of trading.
Many analysts, including Mark Decambre of MarketWatch have attributed gains over the last two days to “defensive positioning ahead of the Christmas holiday”, as well as pent-up demand for the precious yellow metal.
Considering that US equities have risen to all-time record highs throughout the last couple of weeks, analysts believe that the recent rise in gold has been due to a protective measure against a fall in equities beginning next year.
Marios Hadjikyriacos, investment analyst at XM said that “some traders are preparing for trades in 2020 and view this is a good time to purchase of gold to hedge their bets after a strong run for equity indexes.” He also said that after such a strong year, when almost every single asset class was up in double digits, this is probably a prudent time to play some defense and hedge the risk as we head into 2020.
It is my personal belief that the majority of today’s rise was as a defensive measure before Christmas in case North Korea acts upon their threats and does something nefarious that would cause the United States to react.
President Trump said that he wasn’t worried about a recent threat from North Korea. Speaking with reporters at his mar-a-Lago resort today he said “We’ll find out what the surprise is and we’ll deal with it very successfully.”
He also said “maybe it’s a nice present, maybe it’s a present where he sends me a beautiful vase.”
That being said today’s rise will continue if in fact North Korea acts upon their threat, however the opposite is also true in that we should see gold soften on Thursday if North Korea does not act on their threat.
We want to wish all of our subscribers that celebrate Christmas a very Merry Christmas. We also want to wish all of our subscribers the best of this holiday season regardless of what you celebrate at this time of year. We all have much to be thankful for as we approach the next decade 2020.
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Wishing you as always, good trading,