Have The Metals Hit A Glass Ceiling? Here’s What It Takes To Break Resistance
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(Kitco News) - The economic backdrop has provided the ingredients for gold to move higher towards $1,400 this year, but the yellow metal needs to break past key resistance levels first, said Bill Baruch, president of Blue Line Futures.
“I like gold being able to hit $1,400 [an ounce] this year,” Baruch told Kitco News. “There is a really good landscape right now with these treasury yields, and the potential of the dollar moving lower.”
Baruch’s comments come as gold fell $13 on Thursday to close at $1,295.70. The yellow metal previously tested highs of $1,345.75 in mid-February, before falling to a low of $1,283.80 in March.
Thursday saw equities markets rally on the back of a postponed Brexit deal, calming investors on geopolitical worries.
Gold’s momentum is still tied to the dollar’s fate, Baruch said.
“What we’re going to have to see, ultimately, is some dollar weakness to really get the ball rolling. However, I really like gold, and I’m going to stay bullish gold, but my base case is yields. And in the treasury yields, I don’t see yields over the long term, I think they’re going to be going lower, and yields around the world are going to be going lower, and that’s going to be supportive for gold in the intermediate and long term,” he said.
For gold to see continued upward momentum, trend line high of $1,330 an ounce must be broken, Baruch said.
“If you get out above there, then you’re testing those previous swing highs from a few weeks back. If you get above that, you’re going to get that FOMO buying that really kicks in, and that could really take that to $1,400,” he said.
On silver, Baruch said that outperformance versus gold this year is certainly possible, but a breakout over the current trading range needs to happen before it takes the path of least resistance higher.
“We need to first get out above the $15,60 [an ounce area]…and really close above $16. I think you would get a lot of people excited if we start to close out above $16,” he said.