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Wednesday, December 1, 2021

Gold Prices Broke Out to Fresh 7-Yr Highs


Tuesday, Gold prices broke out, to fresh 7-year highs as concerns over declining growth do to the coronavirus buoyed the precious Yellow metal.

The rally in gold comes despite a surge in the USD to fresh multi-year highs. The 10-year US yield is trading near the low end of its 5-yr range and poised to break down.

Gold prices have been negatively correlated to gold prices and a breakdown would be a confirmation of a further rally in the metal.

Gold has historically been negatively correlated to the USD.

During the past month, this relationship has broken down. A potential catalyst that could drive yields lower is a slump in US markets. This could begin following Apple’s (NASDAQ:AAPL) warning about the risk to its Q-1 revenue guidance due to the coronavirus.

Technical Analysis: Gold prices broke out closing at a fresh 7-year high and poised to continue to climb. Prices closed above 1,600 and are poised to test the January highs at 1,611. A close above that level would lead to a test of the 2013 high at 1,696. Support on the precious Yellow metal is seen near the 10-Day MA at 1,574.

Momentum has turned positive as the MACD index generated a crossover buy signal. This occurs as the MACD line (the 12-Day MA minus the 26-Day MA) crosses above the MACD signal line (the 9-Day MA of the MACD line). The MACD histogram crossed above the Zero-index mark, a buy signal. The MACD histogram is printing in the Black with an upward sloping trajectory which points to higher prices, seeing 1700 oz in here.

Both the RSI and the Fast Stochastic are accelerating higher pointing to accelerating positive momentum. The current reading on the Fast Stochastic is 84, above the overbought trigger level of 80 which could signal a pullback, expect traders to buy the dip for value.

Stay tuned…

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