What a difference a month makes! Market sentiment on gold has moved from 100% negative to 60% negative among investment advisors.
For technicians, a breakout to the upside has occurred with closing prices over $1,330, which now becomes a support level. The next area of upside resistance is now $1,460.
The short sellers, who borrowed and sold gold that they didn’t own, are getting punished now and good enough for them. Not much comment out of Goldman Sachs since their $1,000 gold forecast several months ago.
At the current $1,375 level, physical demand in the U.S. is best described as sub normal. To me, that implies further strength on any future news event. Take your pick; Fed resumption of Quantitative Easing, more U.S. dollar weakness, cancellation of India’s 10% import tax on gold, Russia invading Ukraine or a possibly serious stock market decline.
Or something else less expected such as a terrorist attack here, escalation of Mideast tension or nuclear threats from Iran or North Korea.
The industrial metals are less affected by geopolitical events and are performing accordingly.
Hang on, it’s going to be an interesting year.