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The Gold Bull: It's Aliiiive

Kitco News

Editor's Note:The Kitco News team is headed to San Francisco to cover the Silver & Gold Summit. You won't want to miss out on the Gold vs. Bitcoin Debate and exclusive interviews we have lined up with some of the biggest names in our industry. Stay tuned for all our coverage starting November 20, 2017.

(Kitco News) - The gold market appears to have finally woken up, settling on Friday at a four-week high. December gold futures settled the week at $1,296.50 an ounce.

The late-week move comes as gold has traded in a fairly narrow trading channel. According to an article by Sarah Benali, the gold market hasn’t been this compressed since 2005. While there is some momentum growing, with gold prices closing above key resistance levels, many technical analysts say the true test of this upswing will come at the October high at $1,306 an ounce.

Gold’s latest move comes as Congress has made some progress on much-anticipated tax reform and tax cuts. Thursday, the House of Representatives passed their version of the bill; unfortunately, the sweeping legislation is not seeing much love as there is still a lot of uncertainty and turmoil in Washington.  To use an old farming cliché: Congress still has a long row to hoe as the Senate tries to push its legislation through. The Republican-controlled Senate has a very slim majority and can only afford two “No” votes. This is the same reason why sweeping healthcare reform has stalled.

This uncertainty is pushing both the U.S. dollar and equity markets down, two big tailwinds for the yellow metal.

Analysts also see another reason for higher gold prices, which they say hasn’t attracted a lot of attention in the gold market: a flattening yield curve.

A flattening yield curve is when the spread shrinks between short-term bonds like 2-year notes and long-term bonds like 10-year notes. A flattening yield curve makes gold more attractive as its opportunity costs go down.

Whatever the reason for gold’s new bullish drive, it comes at the right time. The entire Kitco News team (well everyone but me who is staying behind to write this note) is heading down to San Francisco for the Silver & Gold Summit. Stay tuned next week for our exclusive coverage of the event… and personally, I hope they bring me back a t-shirt.

Of course, not every precious metal is seeing a lot of love these days. Thursday evening was a huge night for Tesla as the company unveiled its new semi-truck, referred to as ”The Beast.” According to analysts at ABN Amro reported by Anna Golubova, electric cars could lead to the demise of the platinum and palladium market as electric vehicles don’t need catalytic converters. Autocatalyst demand accounts for 40% of platinum demand and a whopping 75% demand for palladium. The analysts warn that as fleets become electric, platinum prices could be around $500 an ounce by 2040 and palladium could be trading around $400 an ounce by then.

Well that is about it for this week. Don’t forget to catch all our coverage from San Francisco.

Finally, if you have ever wondered what gold tastes like, check out Daniela's video as she bites into a $1,000 New York bagel.

Have a great weekend!

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.