For the past fifteen months or so, gold has repeatedly been turned back by immense technical resistance in the $1370 area.
Double-click to enlarge this daily gold chart.
There have been three clear attempts to push through the $1370 area since November of 2016. The first two failed miserably, but the current move looks much more positive.
During the latest pullback from $1370, the bears have only managed to push the price modestly lower, to my key buy zone at $1310.
The gold price promptly leaped higher as soon as it touched that area. This is very positive technical action. If the bulls fail a third time (unlikely), investors should be aggressive buyers at my $1270 and $1240 buy zones.
Double-click to enlarge this gold chart for a closer look at the current price action.
Gold is attacking the $1370 area from a symmetrical triangle pattern. Using the classic technical analysis promoted by Edwards & Magee, there is roughly a 67% chance of an upside breakout.
That breakout would push the world’s mightiest metal through $1370… and open the door for a rush higher towards $1420, $1470, and $1520!
Double-click to enlarge this exciting dollar versus yen chart.
The dollar’s breakdown under the key 108 support area adds tremendous weight to the argument that gold is poised to surge above $1370.
Most Trump supporters are focused on his campaign pledges regarding immigration, tariffs, defence, deregulation, and tax cuts. Their focus is on growth rather than inflation. That’s a mistake.
Reduced immigration tightens the labour market, pushing inflation higher. Borrowing money to buy more bombs to expand an already-gargantuan military-industrial complex puts immense pressure on the bond market. Deregulation and tax cuts are also inflationary.
While these pledges are indeed positive for gold, my main focus has always been on his more “thunderous” pledges regarding dollar devaluation and a haircut for T-bond investors.
