Gold and related investments are off to a very positive start in 2018.I don’t expect any major pause in the action until China’s Golden Week holiday celebrations get underway. Chinese gold dealers will be on holiday this year from about February 15 to February 21.This creates a significant vacuum in gold demand. As dealers and Chinese gold markets close, the gold price tends to soften in global markets.
The good news is that gold has a rough general tendency to rally strongly ahead of the Golden Week festival, and that’s happening right now.
Gold has reached the outer boundary of my $1340 – $1365 resistance zone.
A flag pattern is possibly forming.Note the nice pennant pattern that formed at the $1320 resistance zone area.I would also like investors to note that gold has burst through resistance at both $1300 and $1320 with ease.
Short term technical indicators are overbought and a pullback is expected.Hopefully the pullback is a flag pattern rather than something deeper.
Regardless, both the $1320 and $1300 price zones should now function as support on any pullback.
The $1365 area on this February futures chart is much more formidable resistance, because it represents the highs made when India’s Modi “trumped the Trumpster” by calling in the nation’s fiat money.
Modi did that on US election night, as India’s powerful gold buyers were buying enormous amounts of gold to bet on a Trump victory. Their bets were correct, but Modi ruined the payoff.
That horrific demonetization announcement was followed by “know your client” and GST tax policy announcements.In the short term, these policies were all negative for both gold and GDP growth.
A lot has changed since those policies were unveiled.The Indian gold jewellery market has almost finished restructuring.
Demand for gold in India is now very steady and rising.That trend is not just “here to stay” but here to accelerate!
