18th April 2017, GTC Advisors – Precious Metals Update – Gold on the Move
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GENEVA, Switzerland - April 18, 2017 - PRLog -- As US markets continue to hold the gains seen earlier in the year, the precious metals market is seeing some support as Gold looks to edge closer to the magic $1,300.00 mark.
As gold flirts with the $1,300 an ounce, many gold bugs are wondering just how high the precious metal can run.
Gold finally breached through the 200-day moving average last week, with the closely watched technical indicator having brought a halt to bullion's run a couple of times in 2017. The last time the gold price broke above the 200-moving day average was in November, but the breakout was only short lived.
The renewed strength in gold, which has rallied roughly 14% from its December lows, has emboldened the bulls. Gold has also received a boost from the Trump administration's military strike on Syria and mounting tensions with North Korea.
Geopolitical tensions continuing in the Middle East and new issues with North Korea could see the safe haven push higher over the coming weeks.
Gold bulls also have their eye on inflation, which has typically been a positive for gold.
As if you need more proof that inflation is finally starting to pick up, lumber prices rose to a 12-year high last week, supported mainly by expectations that steep duties will soon be levied on cheap softwood imports from Canada. Lumber futures rose to nearly $415 per thousand board feet last Monday, a level unseen since March 2005, soon after homeownership peaked here in the U.S.
So what does that mean for gold?
This is all very constructive for the price of gold, which has historically been used as a hedge during periods of rising inflation. The yellow metal closed above $1,270 an ounce last week for the first time since soon after the November presidential election. A "golden cross" has not yet occurred, with the 50-day moving average still below the 200-day, but such a move appears likely in the next few trading sessions if upward momentum can be sustained.
Whilst precious metals offer an interesting hedge against the markets, equities still look ripe at the moment and the continued strength of the US markets and the USD will keep many fully invested for the time being. We suggest a small position in an ETF such as GLD for exposure to the commodity as this affords far more flexibility than the options markets.
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