Hawaii Six O - Gary Wagner
Gold’s rise in value continues to confound the expectations of experts
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Gold prices are currently in an accelerated and dramatic rise in price, with clear-cut geopolitical reasons for these recent moves. What is most surprising and welcomed is how gold is once again acting as a haven asset, a position it fell out of favor with some time ago.
Recently, it has been the Federal Reserve’s restrictive monetary policy that has defined bearish sentiment in gold, which resulted in prices becoming range-bound and at just recently at the lower end of that range. Dollar strength and higher yields have been the underlying outcome of many of the policy decisions by the Federal Reserve.
Gold’s gain has been so profoundly rapid that it has run to a three-month apex today. After hitting a low at approximately $1830 during the first week of October and before the attack on Israel by Hamas, its current pricing is only six dollars shy of $2000 with the intraday high at a respectable $2009.20. Gold has not traded to that value since the middle of July.
The chart above is a Japanese-style average chart, simply labeled a “Heikin Ashi chart.” The key difference between a standard Japanese candlestick chart and a Japanese average chart is how the opening value is created. While a standard Japanese candlestick chart uses a true open the Japanese average chart fixes the open from the midpoint of the prior session, on a daily chart it would use the midpoint of the prior trading day.
In recent years, there has been an unexpected change in how market participants invest in and perceive gold. The precious yellow metal has for centuries been a haven asset but has recently lost its allure as a safe asset.
The complexities of the issue that have moved gold higher, sadly, have no easy resolution and expectations of a quick and peaceful conclusion. It is more likely that the issues that have moved gold to higher ground in a short-period will not only remain, but accelerate.
As of 6:21 PM EDT, gold futures basis the most active December contract is currently up $13.90 or 0.70% and fixed at $1994.40.
Gold unsuccessfully tested pricing above $2000, and it was clear that at least at this point was an unrealistic, unsustainable price for gold to settle at. However, if the geopolitical crisis becomes more than a regional one, we are talking about a completely different scenario with ramifications that are unthinkable to the point that I do not wish to even speak on them.
I believe that it’s not if, but when, gold will close above $2000, and my upper target by the end of the year is firmly above $2100 per ounce.
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Wishing you as always good trading,
Gary S. Wagner