Gold finally shattered the $1300 level on August 28, 2017, and achieved it in great style. Having London exchanges closed down for a holiday, yellow metal turned out to be moving much better in quiet Eurozone trading, showing an absence of sellers instead of a bid. As soon as The Big Apple opened, the prices increased towards $1300 level, well before roaring through it by mid-morning. It finished $27 up at $1319.50 in quite heavy Comex exchange volume.
Silver then followed Gold by very early in Eurozone trading session on Friday morning (September 1) by climbing $28 for the week closing at $1318, and silver rising 45 cents closing at $17.52 on the week. On Comex exchange, yellow metal currently is firmly in overbought zone, with OI (Open Interest) being up notably high as well as the high for the 12 month period.
I have created the following 12-year chart for the US Dollar price of Gold displaying in which Gold prices have already been converging into a small tunnel in between a pair of price trends - one particular trending higher the other lower - within the past six years.
Right after breaking the significant $1300 price level so decisively, certain price consolidation would be appropriate. And also as volumes were gone down on Tuesday (August 29), there was clearly some profit-taking. On Wednesday early afternoon, Asian time when trading had been extremely slim, some entity sold 26 tonnes of paper gold contracts on the precious metal market, most likely with the aim of pushing the price downwards back again through the $1300 level. The endeavor was unsuccessful, and yellow metal rebounded back to close price following day at high for the year.
Gold had a couple of factors to its price action. The very first and foremost was the robustness of the Euro Dollar, forcing the US Dollar’s trade weighted index downward, and the second factor was the overall performance of yellow metal itself. Up to now, the recovery within the Gold price has been the opposite image of the US Dollar’s lack of strength, together with the Euro Dollar price down on the year of 2017. The good news is, the yellow metal itself is starting to rise against various other currencies in the process.
This is an entirely different setting from that over the summer season trading. The desire for yellow metal with all these major currencies is building; therefore we should expect physical ETF (Exchange Traded Funds) interest to rise over the remainder of the year. A person in the Eurozone, for example, considers a bull market within the US Dollar price and discovers that yellow metal continues to be “good value” in European single currency. While at some time or another, the Japanese individual may see yellow metal as a hedge for the lagging and weaker Yen currency.
The US Dollar appears to be deteriorating further. In the near term, there are the uncertainness regards the US Government debt limit talks, with the Federal Government running out of funds by mid-October of 2017. On top of that, it's becoming apparent that the US economic climate is stagnating, and also the world is flooded with greenbacks. Key commodity prices likewise are rising on Asian market demand.
The Eurozone overall economy is starting to increase, driven by Asian countries trade. That is in striking comparison with the United States, which is omitted from the Asian plot. This, in turn, leaves behind Eurozone monetary policy much wrong-footed, along with the ECB (European Central Bank) continue to keeping interest levels at the 0% bound, and also bank reserves at negative 0.4%. What's more, QE (Quantitative Easing) continues to be injected at €60 billion each month into the EU economy.
Even though the world slumbers on, incorrectly thinking the European Union is in serious economic danger, the truth is it's financial trouble, considering that the European Central Bank is going to be forced to cease its Quantitative Easing and Zero Interest Rate Policy within the next couple of months and boost the interest rates. The thing is, even the European Central Bank does not seem to comprehend it yet.
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