Buy The Dip in Gold

Posted on | by Todd | Leave a Comment on Buy The Dip in Gold

After a sharp rally on the back of equity weakness last week, Gold has consolidated above the $1240.00 level.

The technical picture is still constructive as the yellow metal is still above the 30-day moving average  at $1234.00 and the RSI reading at just above 56.00.

There are still many global stock indexes trading at elevated prices. The market has proven that the inverse correlation of Gold moving higher, as stocks move lower, still intact.

We see scope for a test of the $1235.00 level before trading higher next week. Our medium-term target is the November 10th high of $1292.00.

Investors looking to profit on a move higher can look at either the Vectors Gold Miners ETF (GDX), buying the dip in Newcrest Mining down to $22.00, or placing Newcrest Call Option strategies.

Chart – GDX
Chart – NCM

US Payroll Preview

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The  US Non-Farm Payroll (NFP) report, scheduled for 12:30 am Sydney time tonight, could have a significant impact on global financial markets.

In a speech last Friday, FED Chief Janet Yellen was very clear that steady employment growth and rising inflation were the key indicators guiding US interest rate policy.

Tonight’s report will reflect both the number of new jobs created in the month of February and the pace of wages growth.

Wednesday’s release of the ADP private sector job’s report printed much higher at 298,000 on expectations of 184,000. And while the ADP data is far from a foolproof indicator of the NFP report, it would be a big surprise if the headline jobs number printed much below the 200,000 consensus forecast.

Against this backdrop of an imminent FED rate hike, US 10-yr bond yields have reached a three year high of 2.64%, Gold has dropped below $1200.00, Crude Oil has fallen more than 8.5% this week and Copper has lost more than 6% over the last 10 trading sessions.

It’s likely that a NFP print of  230,000, or more, will be bullish for the US Dollar and negative for Global equity markets.

Gold Catches Safe-Haven Bid

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Spot Gold prices hit a 3-month high of USD 1,235.00 as geopolitical tensions increased the yellow metal’s safe haven appeal.

Political uncertainty regarding upcoming elections in Europe, the US and Iran exchanging threats and unstable banking sectors in Italy and Greece have all added to investors’ interest in Gold.

From a technical perspective, the next key price target is at the November 11th high of USD 1292.00. We would suggest exiting long positions in that area.

Shares of Newcrest Mining have followed the gold price higher and have rallied over $3.50 during the last eight trading sessions. We expect to see the $24.50 level offer the next area of resistance and look to exit long positions in that range.

Chart – NCM

 

Gold: A Corrective Move Higher

Posted on | by Todd | Leave a Comment on Gold: A Corrective Move Higher

In our 2017 preview, we noted that Gold was ending the year in a  stabilization pattern after falling sharply from the November highs. This fall saw the yellow metal drop from $1330 to $1120 (16%) in just over a month.

So far this week, Gold has moved from around $1140 to the current level of $1180. We feel this move is a combination of short-covering and a generally weak tone in the US Dollar. Technically, Gold has posted its first close above the 30-day moving average since November 9th, which suggests that this corrective move has more upside potential in the near-term.

Our base case is that the US Dollar will continue to consolidate from its sharp rally over the last two months, which will lift Gold prices higher. The daily charts point to the November high of $1220.00 as the next significant upside target within this corrective phase, and a good place to exit long positions.