Gold Rips to Fresh New High
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(Kitco News) - What a way to wrap the week with a bang – as of newsletter time, the gold price this Friday was on a tear, hitting a fresh 52-week high.
Gold prices scored a 13-month high in early U.S. trading Friday. Silver prices are on the march north, too. August gold futures were last up $12.90 an ounce at $1,356.30 while July Comex silver prices were last up $0.198 at $15.09 an ounce.
The move caught many traders by surprise. But as our friend Todd 'Bubba' Horwitz of bubbatrading.com said, these moves never announce themselves.
"We know that trying to predict outcomes based on news, politics and other outside factors is a fool's game and the only true way to enter high-probability trades is to let the market footprint guide you," he wrote in his morning Kitco commentary.
He said the breakout is a "jailbreak," which has also given investors a new footprint. "Support is now $1,350 and $1,400 is in play as the next major target," he said.
So what's behind the move and momentum? Read David Erfle's report, which highlights some key drivers behind the move. Erfle cites mounting concerns about the health of China's economy, which have hit riskier commodities and tensions in the Middle East are pushing investors into safe-haven assets.
"The move began to accelerate earlier this week when the closely watched CPI Report, which measures U.S. inflation, was released on Wednesday. The core consumer price index, which removes energy and food costs, rose 2% from a year earlier and trailed forecasts in May," he said.
After the soft U.S. inflation data was released, the Fed Funds Futures projection of a rate cut by the central bank at its July 31st meeting rose to 87%, with a more than 25% chance of a cut next week. The last Fed rate cut cycle began in August 2007, which sparked a gold rally of 32% into 2008.
Everyone seems to be excited about gold right now, including the billionaire club. Paul Tudor Jones, fund manager and creator of Tudor Investment Corp., said that his favorite trade in the next 12 to 24 months is gold. He added that if the price can break through $1,400, it will push to $1,700 an ounce "rather quickly." "[Gold] has everything going for it," he said.
As we wrap this week – the Kitco News team would not be proud Canadians if we didn't extend our CONGRATS to the Toronto Raptors NBA Champions!
And to all the incredible Dads out there including my own, WISHING YOU ALL a Very Happy Father's Day! Happy BBQing!