What’s Up with Gold?

Inflation is making a comeback, interest rate hikes are on the cards, Trump is talking up tariffs and trade wars – while Putin is upping the stakes on “real” wars – none of it makes for a comfortable night’s sleep if you have any kind of exposure.

Gold, meanwhile, is sitting in limbo… inflation is rising though, and 4% seems to be forecast as the point at which the dollar will be beaten into submission – if inflation goes to more than 4%, interest rates would have to be higher than 6% to stop it. This is not a sustainable outlook for the fed. If history is anything to go by – they will let inflation do their job – at that point, gold will be the only game in town…

Since it’s rally at the end of December, at (1) gold has risen to take out all of the EMAs (Exponential moving averages – shown here as 21-day, blue, 55-day green, and 100-day orange) at (2). From here it rallied strongly to hit the $1,350 level – but that is as far as it went – except for some very brief forays above this towards the end of January – it couldn’t close above this level, at (3).

In fact, it then fell back, at (4) taking out the 21-day EMA – but being held by the 55-day EMA at the beginning of February. A quick rally, too (5) followed, to retest the previous highs – but, again, it could not break through that $1,350 line – and has since fallen back, to be supported, once more, by the 55-day EMA, at (6).

Looking at the chart then, it seems that gold is destined to bounce between the $1,350 level, at (8) and the $1,300 level at (7) for the foreseeable future. Further, it appears that, in the short term, at least, the EMA levels will hold the key to gold’s movements. They form an even narrower band of price – between $1,327, for the 21-day EMA, and $1,319 for the 55-day EMA. That doesn’t leave a lot of scope for significant gains or falls.

Like all markets, gold runs on sentiment and emotion. Gold will not rally significantly until we see demand for gold investment.

Most investors are hedging their bets – and keeping their money in stocks – where they see a more short-term gain, despite the risks of a fall. It seems that very few are taking a flight to precious metals – they do not see the danger lurking – or do not consider it serious enough to warrant changing strategy.

As past events have shown us – sentiment turns on a dime. Equally, watching, and acting, on every slight movement in the market, is not cost effective (not to mention exhausting) and investors seem to have lived with the extraordinary levels the stock market has delivered, for so long, that it has become “normal.”

The truth is – it is far from normal – and complacency will get you squashed…

Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.