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Gold closes at the highest value this year

Gold prices are moderately higher, closing above the highs achieved in January during the brief skirmish between the United States and Iran. In fact, the last time gold traded at this level on a closing basis was in February 2017.

The precious yellow metal broke above $1600 per ounce yesterday, and today continued to move to higher ground. As of 4:00 PM EST gold futures basis the most active April contract is currently trading up by $11 (+ 0.69%), and fixed at $1614.60.

The safe haven allure of gold continues to be centered around the real potential for a global economic slowdown based upon the coronavirus outbreak (COV-19), as new cases of people contracting the virus continues to swell, and the death toll continues to grow.

However, unlike yesterday U.S. equities seem to look the other way as both the Standard & Poor’s and NASDAQ composite closed at a new all-time record high. The S&P 500 gained just shy of ½% and closed at 3386.15. While the NASDAQ composite gained almost 9/10’s of a percent and closed at a new all-time record high of 9817.77.

This most recent move above $1600, and more importantly a close above that price point has some market analysts and speculators now looking for much higher prices.

According to Marketwatch, Brian Lundin, editor of the gold newsletter said, “The markets are in the throes of a weird mix of safe-haven and speculative motivations.

The U.S. dollar and stock market are benefiting from an influx of global funds looking for security during the coronavirus uncertainty, but stocks domestically and worldwide are also joining gold and silver in expectation of central bank stimulus to counteract whatever the economic effects may be. So, for now at least, fear and greed are combining to move most markets higher. Prices may hit a record level of $2,000 before the end of next year … The timing of that would keep the market from overheating and give investors more time to make more money in mining equities, which typically over leverage to gold’s moves.”

His long-term projections and analysis come to the same conclusion as my work with Elliott wave and Fibonacci extensions which are forecasting that gold could trade as high as $2800 over the next 4 to 5 years. He is quoted as saying, “I think we’ll set a new record in real terms, exceeding $3,000, at some point over the next four years or so.”

Although our style of market analysis differs in approach I still find it interesting that we are both reaching the same conclusion. Courtesy - Kitco



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