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Gold Climbs Higher

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gold climbs higher

Gold Climbs Higher

Aug 21 2015, 08.13am GMT

STOCK.com

Gold has once again started to glitter as it regained its lustre from the combined effect of dovish Federal Reserve minutes and a global decline in stock markets that once again convinced investors of its safe haven status.

Significantly, the precious metal price broke through its 50 day moving average as gold for December delivery (GCZ5, +0.91%) increased by 2.2% or $25.30 to settle at $1,153.20 per ounce on THE Comex. The price increase added to the $11.00 gain on Wednesday WHICH resulted in the highest settlement for a most-active contract since 14 July.

Mike Armbruster, principal and co-founder at Altavest Worldwide Training said, “Gold appears to have put in an intermediate bottom. Long term fundamentals remain bullish with easy monetary policy everywhere you look.” He added that, “China’s yuan devaluation also coincides with gold’s recent low.”

He feels however that we need to see more upside on the price before any conclusion can be drawn on whether gold had reached a long term bottom. “Short term, we think gold could rally to $1,190 before hitting much resistance. If gold can move decisively through $1,200, then gold starts to look much more interesting.”

Gold chart technical analyst Gary Wagner, writing for Kitco, comes up with similar conclusions saying, “We’re at a critical point - roughly the $1,150 to $1,1155 area - and a break and a close above this area, really signals something significant.” Fundamentally, he says, gold is benefitting from weaker equity markets and global economic uncertainty adding, “And that, of course, is affecting the Fed decision on when they will pull the trigger on higher interest rates.”

Meanwhile, Erik Gebhard, co-founder of AvaTrade, said, “expectations are now that the Fed won’t hike in September.” He expressed the view that should rallies in the price of gold breach the 100 day moving average level of $1,170 and head towards the $1,200 level, this “would be a good selling opportunity.”

Greek Prime Minister Alexis Tsipras announced his intention on Thursday to resign in order to hold snap elections in the hope of strengthening his hold on power. During the speech, while making the announcement, he told the Greek people, “I want to be honest with you. We did not achieve the agreement we expected before the January elections. I feel the deep ethical and political responsibility to put to your judgement all that I have done.”

This latest twist in the Greek drama will only add to global economic uncertainty in the short-term adding additional impetus to gold’s surge.

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