Gold and silver prices are modestly increasing, supported by a weaker US dollar index and the rebound in the beleaguered crude oil market. The US dollar lost positions to one of its direct competitors in anticipation of the Thanksgiving day. This has enabled precious metals to gain profits. The spot price on gold increased by 0.17% to 1,227.68 USD per ounce, while the spot price on silver rose by 0.11% to 14.50 USD per ounce.
Yesterday, the gold prices marked their strongest session since November 7th, reaching a level of 1,230.07 USD per ounce.
But many analysts see the upward trend very limited, having mostly bearish attitudes to the previous metal. Gold has been in focus of many traders as a classical defensive asset. Previously, the US stock indexes and Gold have been showing a negative correlation, but not this time.
Gold is setting up for a limited upside breakout or a more massive downside breakout. There is no meaningful demand for gold from current price levels and if you take a look at COT-reports, you would clearly see that the net position of Large Traders and Commercials is balanced. Strategic reversals usually don’t occur in circumstances like this.
SPDR Gold, which is largest gold ETF, has taken in 600 million USD in assets over the past month. It is a notable one-month movement into gold by investors, especially in light of the near 3 billion USD move out of SPDR Gold year-to-date made by investors. So far in the fourth quarter, gold ETFs, including SPDR Gold, are up roughly by 2.5%.
Gold price: Bull or Bear?
Warren Buffett’s pointed comment that gold has no utility. It just sits, and there is a cost for it to sit. And an opportunity cost. So why do people buy something which has no utility and no return?
One reason is speculation, as many traders buy whatever is going up, in an attempt to cash in on the rise. A second reason is fear of counterparty default. Third reason is that gold is a non-expiring hedge for monetary collapse and/or a currency regime change. This is a broader version of simple counterparty default.
Gold, which is the classic bear-market investment, has been ignored by investors this year, as the world markets are in strong bullish trend, rising significantly since January. This lead gold prices running down, losing about 100 USD in the price per ounce. But as more investors fear that the end of the bull market in stocks is near and volatility continues. We already saw Wall Street indexes wiping out all the gains since the beginning of the year, which usually would mean that gold must rise significantly and compensate the loses from January, but this did not happened. The gold price is on the uptrend, but far away from the levels of 1,320 USD from the beginning of the year.
Obviously the correlation between the US stocks and gold is not, as fixed as many expects. Of the bearish trends on the global market are not long-term projected, but most probably treated like correction. This will mean that stocks will return on uptrend and will keep pressure over gold prices. Probably the gold price will be in bearish zone for long-term, especially in case of improvement of key economics issues – the US-China trade relations, Brexit deal and Italian budget.
Gold price technical analyze
Technically analyzing the price of gold, we can see a big bullish day from October 11 with no further participation of buyers. Usually, it means that the move from October 11 was a single-time event. If the price grows from inside of a trading range, the move might not have enough fuel to quickly establish new highs.
During the trading yesterday, the gold increased its value from 1,221.29 USD to 1,225.74 USD per ounce. This morning it traded at 1,227.68 USD per ounce.
If during today’s trading, the gold overcomes the resistance zone 1,230.57-1,230.91 USD, it will heads reaching and testing the zone 1,235.41-1,235.57 USD. Upon success, the upward trend may continue to 1,240.90-1,241.24 USD.
In case of falling below the support zone 1,220.58-1,220.24 USD, then the next support will be the zone 1,214.91-1,214.75 USD. In case of a breakthrough, the downward trend may continue to 1,210.25-1,209.91 USD.
Silver price technical analyze
During trading yesterday, silver rose from 14.30 USD to 14.47 USD per ounce. This morning it traded at levels 14.50.
If the silver overcomes the resistance zone 14.58-14.61 USD, it will head to reaching and testing the zone 14.69-14.7 USD. Upon success, the upward trend may continue to 14.86-14.88 USD.
If the silver falls below the support zone 14.33-14.31 USD, the next support will be the zone 14.15-14.14 USD. In tcase of a breakthrough, the downward trend will continue to 14.06-14.03 USD.