Gold Pushing Higher Toward $1700!
Gold is by far the most interesting and difficult investment to handicap and analyze from a fundamental perspective as it has dual properties that can sometimes be seemingly in conflict with one another.
On the one hand, gold has traditionally been seen as a hedge against inflation, but on the other hand, gold can also trade like an alternative currency that cannot be debased by Central banks. The precious metal can flip-flop back and forth between these dual properties but make no mistake about it, gold is now moving back higher.
This move though is likely as a result of its alternative currency trait, as the Euro has been moving lower because of the risk in the market. However, gold has also been moving higher as the Euro has been moving higher, so which is it?
This is confounding the hard-core fundamentalists, so let’s take a more simplistic approach. Much of gold’s moves can be attributed to anti-US dollar sentiment which also used to be the way that he Euro traded. However, there is an overwhelming feeling that both the Euro AND the Dollar should be moving lower in tandem. The former should be lower because of the debt crisis, and the latter because of US Fed money printing. With increased money supply flooding the market the natural expectation is that there should be inflation, but that does not appear to be the case today.
So either way you slice it, gold will continue to get a bid and should move higher past the R2 daily pivot resistance we are seeing today at $1657, with the hope that it will continue higher to $1700!