USAGOLD/Peter A. Grant/02-07-17
Gold is trading slightly higher on the day after recovering from earlier corrective losses, as stock and dollar gains have moderated. Safe-haven interest and the generally constructive technical picture are seen as being supportive to the yellow metal.
Going back to December and the rate hike, we’ve mentioned on numerous occasions how familiar the price action felt to that surrounding the the rate hike in the previous December (2015). I received a chart yesterday from Ron Griess of TheChartStore.com that clearly illustrates the déjà vu:
As Ron points out, “history does not always repeat exactly,” but the match at least through yesterday is pretty interesting. The implication is that gold may have about another 10% on the upside, if it is in fact going to follow the 2015/2016 track.
Yesterday we saw definitive breaches and closes above two key technical levels: The 38.2% retracement level of the entire decline from the July 2016 peak at 1375.15 to the December 2016 low at 1122.50, which was at 1219.01. And the 100-day moving average at 1220.21.
This lends considerable credence to the uptrend that has emerged since December. With the 20-day MA trending higher toward the 100-day MA, we’ll look for a crossover in the near-term as another encouraging technical signal. The next resistance to watch is defined by the 50% retracement level of the aforementioned H2-16 decline, which comes into play at 1248.82.