Wednesday’s trading session witnessed a strong rally in the gold markets, which continue to climb toward the $1800 level. As we are currently near the top of a range, I believe this market will continue to be extremely noisy. However, if we are able to surpass the highs of the past few days, we will overcome opposition and may perhaps reach $1875. Underneath is the 200-Day Exponential Moving Average, and as a result, I believe there are a large number of people attempting to invest in gold, but they must accept that the gold market will occasionally rise in tandem with the US dollar.
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This has much to do with recession, and when viewed through the lens of history, both gold and the dollar have risen simultaneously in the past. As people attempt to understand why they are purchasing gold, there is a great deal of commotion in this situation. Inasmuch as interest rates are declining, gold benefits, but asset preservation becomes a huge issue. (Ironically, this is sometimes the reason why individuals purchase the US dollar.)
Ultimately, this is a circumstance where one should “buy on the drop.” If we can break above the previous week’s highs, then we have another $50 or so in store.
