Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Gold: $1900 Looks More Likely Than Ever

By Investing.com (Barani Krishnan/Investing.com)CommoditiesNov 16, 2021 04:19AM ET
www.investing.com/analysis/gold-1900-looks-more-likely-than-ever-200608483
Gold: $1900 Looks More Likely Than Ever
By Investing.com (Barani Krishnan/Investing.com)   |  Nov 16, 2021 04:19AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

A third straight close above $1,860 is indicating that gold bulls may be closer than ever to their target of the past five months: a return to $1,900.

Since slipping in June from the final mile to the $2,000 level, longs in bullion have hoped the rally will return and they can reprise the record highs seen during the height of the COVID-19 crisis.

For months gold failed to act as the inflation hedge it is meant to be. Its return to that role over the past two weeks has encouraged the pro bullion crowd.

In Monday’s trade on New York’s COMEX, gold’s benchmark December futures peaked at $1,873—just $23 short of the $1,900 target. For three straight days, December gold has also made intraday peaks of $1,870 or higher. 

Gold Daily
Gold Daily

All charts courtesy of skcharting.com

All these moves have strengthened gold bulls' belief that the $1,900 level is finally theirs for the taking, after a series of false starts since June. 

“Ultimately this is a market that I think has shown its hand, meaning that we are more than likely going to continue to see upward pressure over the longer term,” Christopher Lewis, who blogs on gold, wrote in a post on FX Empire.

“This is mainly due to the fact that interest rates in the United States are not keeping up with the potential inflationary headwinds, so as long as that is going to be the case, gold has a real chance to make headway.”

Gold’s run-up this time was heightened by the US Consumer Price Index (CPI)—which represents a basket of products ranging from gasoline and health care to groceries and rents—increasing 6.2% during the year to October. It was the fastest growth in the CPI since November 1990, an acceleration driven mostly by prices of fuel at the pump running at seven-year highs. 

Bullion has always been touted as an inflation hedge. But it wasn’t able to live up to that billing earlier this year as intense talk that the Federal Reserve will be forced into a faster-than-expected rate hike sent Treasury yields and the dollar rallying at bullion’s expense.

That trend abated somewhat after Fed Chair Jay Powell assured markets earlier this month that the central bank will be patient with any rate hike and that it will only come in the later half of next year. 

But with the US 10-year Treasury note, a key indicator of real interest rates, hitting a three-week high of 1.62% on Monday, the Dollar Index reached a 10-day peak of 95.46. That sparked fresh speculation that the Fed may have to dump its 'patient-for-now' stance over inflation and raise rates faster than its planned timeline of between July and December 2022.

Still, gold did not crumble on Monday.

“Gold has become popular despite higher yields and a stronger dollar, as inflation-adjusted yields remain at their lows,” said Craig Erlam, analyst at online trading platform OANDA.

“It's also been seeing some love for its role as an inflation hedge, as we saw in the aftermath of the US CPI data last week. If policymakers continue to stick to the transitory line, gold could continue to see support.”

Gold last traded at $1,900 levels in June.

Prior to that, it hit record highs above $2,100 in August 2020 after rallying from below $1,500 in March, during the height of the coronavirus pandemic.

Gold Weekly
Gold Weekly

Technically, the $1,900 level was available for gold’s taking, said Sunil Kumar Dixit, chief technical strategist at skcharting.com.

“Gold has closed above $1,860 for three days, and a week close of $1,860 is the 23.6% Fibonacci level—which is a good affirmation for continuation towards the path of least resistance, i.e. $1,900-$1,916,” said Dixit.

However, with Monday’s slight drop of 0.1% at settlement, the spot price of gold, which skcharting.com tracks, may be exhibiting some correction tendencies, he added.

Dixit said spot gold’s Stochastic Relative was overbought in daily and weekly time frames and this may cause some sideways action without hurting the uptrend.

“Breaking below yesterday's low of $1,856 could also prompt a mild correction to the 10-Day Exponential Moving Average of $1,846 and the 38.2% Fibonacci level of $1,825,” he said.

“I foresee a small resistance at $1,875-1,880 enroute.”

Lewis, who posted his outlook on FX Empire, made a similar point.

“The market has gone somewhat parabolic, so a red candle is probably one of the best things we can see. The move has been rather impressive, but it is difficult to imagine a scenario where we simply go straight up in the air. I think pullbacks at this point in time will more than likely be buying opportunities but try to find some value before you put a lot of money to work.”

Lewis urged investors in gold to pay close attention to the dollar, “because if it starts to strengthen, that could cause a little bit of a headwind.”

Gold Monthly
Gold Monthly

Yet, if the spot price crosses Monday's peak of $1,870, it could extend the upside move to $1,881 on an intraday basis, setting a breakout target of $1,900-$1,916 in the short term, Dixit said. 

“There is hardly any critical resistance before $1,900-$1,916, as long as gold sustains above $1,860,” he added.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

Gold: $1900 Looks More Likely Than Ever
 

Related Articles

Gold: $1900 Looks More Likely Than Ever

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (10)
Gervais Christopher
Gervais Christopher Nov 16, 2021 10:23AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
nope. Gold is going back to the all-time high...and then higher.
Sol Wein
Sol Wein Nov 16, 2021 8:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Simply put, US is in a box. Cant keep pumping money into economy and keeping rates low, and cant let rates go up and stop pumping money into the evonomy. Both options are a doom scenario. Own gold while its still cheap!
SunilKumar Dixit
SunilKumarDixit Nov 16, 2021 8:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sol Wein, so true, Gold is undervalued
Val Mirov
Val Mirov Nov 16, 2021 8:11AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why then the buck is going parabolic?
Bubba Born
Bubba Born Nov 16, 2021 7:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gold is a joke. Bit pink is now the King. Buy gold and you can hope. Buy Bitcoin and laugh all the way to the bank!
Bubba Born
Bubba Born Nov 16, 2021 7:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I hate autocorrection.
Sol Wein
Sol Wein Nov 16, 2021 7:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Btc is a bubble
haidar mhmmd
haidar mhmmd Nov 16, 2021 7:48AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Its 27$ dollars to 1900 .. not 23$
Barani Krishnan
Barani Krishnan Nov 16, 2021 7:48AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Urrgh ... oversight, mate! Thanks for the pointer, will fix. The uptrend is clear though.
Arash Khalili
Arash Khalili Nov 16, 2021 7:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
how work this app
Barani Krishnan
Barani Krishnan Nov 16, 2021 7:39AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
All eyes will be on US Retail Sales, due at 8:30 ET (13:30 GMT). A strong number might add to pressure on the Fed to taper/hike more quickly.
Shrikant Kuwalekar
Shrikant Kuwalekar Nov 16, 2021 7:24AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Only if it crosses $1794.80 with conviction & closing basis
Barani Krishnan
Barani Krishnan Nov 16, 2021 7:24AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes. It has to -- logically, strategically and mathematically -- in order to get to $1,900. Anyway, there are still some resistance points in the way to that target, which explains why the move up has slowed since.
Shrikant Kuwalekar
Shrikant Kuwalekar Nov 16, 2021 7:24AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  Apology. read it as $1894.80 in place of $1794.80
Kristof Naessens
Kristof Naessens Nov 16, 2021 5:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gold and dollar are rising together, a very bullish sign, in fact the dollar is rising against other fiat currencies, gold needs to adjust to the extra amounts of money printed in the world. If it was not for 65 000 gold contracts created out of thin air of pretend gold by the bullion banks the price would already be much higher! If the governments would be in control of the Sahara in 5 years time there would be no sand left.
Barani Krishnan
Barani Krishnan Nov 16, 2021 5:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ha ha, I love the Sahara-sand analogy, Kristof! So true your input. Thanks for the perspective, mate!
SunilKumar Dixit
SunilKumarDixit Nov 16, 2021 5:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Kristof. Sahara twist was too good
Val Mirov
Val Mirov Nov 16, 2021 5:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buck is going to the moon. The “over-printing” argument doesn’t hold
Meru Pet
Meru Pet Nov 16, 2021 5:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
i think you said the word : "covid".
Barani Krishnan
Barani Krishnan Nov 16, 2021 5:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks for the feedback, Meru. Hope all's well on your end. 🙏🏽
Muhammad Raashid
Muhammad Raashid Nov 16, 2021 4:38AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thank you. Good and healthy analysis
Barani Krishnan
Barani Krishnan Nov 16, 2021 4:38AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks, Muhammad Raashid. All the best to you and your positions, mate!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email