Golden 2017

Aren’t You at least a little bit curious why the gold is heading higher when the stocks are also making higher highs and higher lows with almost every daily candlestick? Most books are telling us that when there is a risk-on mode (Bullish stocks), the gold (save heaven assets in general) should be weaker. Also it is said that when the interest rates are higher, gold also should suffer. Rate hikes in US are certain but as we can see it does not affect the gold. Interesting.

Our view on that precious metal was bullish from the beginning of the year (https://www.fxempire.com/forecasts/article/2017-starts-demand-gold-381424). We are very happy to see that the price finally broke the 1245 USD/oz resistance and is still advancing higher. This area will be now the closest support and the next crucial resistance is 1280 USD/oz, where the 61,8% Fibo and the trendline are. Breaking that level will be a long term buy signal but for that we still have to wait a little bit.

OK, so what is driving the markets right now? Why the gold is so resistant to the the higher rates, bullish stocks and stronger dollar? In my opinion that is a genuine demand for gold coming from the smart guys on the Wall Street. In the same time, the situation on stocks can be considered as a bubble and the top of the bubble to be precise here. Top of the bubble is the moment when smart guys are closing their long positions and are moving their money to other places and yes, by other places I mean gold. By doing that, they are getting ready to a bearish event which may be coming to the markets soon. Obviously those are just speculations but the demand for gold is real. So is the bullish trend there. Price action traders never go against the trend so that is the current direction for the guys using technical analysis in their decision making process.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis