Here Is Why Gold Bulls Should Be Eyeing $1,375 Level
(Kitco News) - Many experts are wondering why gold hasn’t broken out yet, especially in light of rising inflation fears, but one analyst says the $1,375 level is what it’s all about.
The key resistance this year has been the $1,375 target, said Matt Maley, equity strategist at Miller Tabak, adding that gold has been testing this level during the last couple of years, but was unable to successfully breach it.
“The $1,375 mark was the metal's highs from both 2016 and 2017, so a break above that line would give gold a technically significant ‘higher high’,” he wrote in a CNBC post published on Friday.
Another aspect of the $1,375 level is that it forms the “top line in ‘an ascending triangle’ pattern.” And if that formation finally breaks on an upside, a very bullish technical momentum will be triggered, Maley said.
“Of course, we always have to wait for an actual break of this key resistance level before we can declare anything. Still, investors should consider that any meaningful break above $1,375 would confirm that the multiyear downtrend has reversed,” he added.
Gold closed last week in a negative territory, down more than 1%. Analysts told Kitco News on Friday that traders should be more cautious around gold next week as prices are caught in the middle of a near-term trading range.
“I maintain my positive outlook for gold. If you think the global economic growth looks shaky, then you want to own some gold,” said Ole Hansen, head of commodity strategy at Saxo Bank. “But I think you need to play gold cautiously and wait for the breakout.”
In the meantime, Kitco’s Weekly Gold Survey revealed no clear consensus in terms of gold price direction for next week either, with Wall Street and Main Street split in their expectations.
But, on Monday, gold began the Asian trading session on a stronger footing, with spot gold on Kitco.com rising to $1,334.70, up 0.50% on the day.