Gold Continues Rise in First Trading Day of 2018
Happy New Year! A fall in the dollar and increased inflation expectations pushed gold higher in the last week of 2017 leading to the highest close in 3 months with the gold spot price returning over 13% in the full year 2017 marking the second year in a row with positive spot price returns for the precious metal.
Gold settled higher Tuesday in the first trading day of the new year continuing the momentum from last week. This morning we saw the November construction spending released showing the highest level in over 10 years, providing a positive economic development to the start of the new year. Construction growth typically supports base metal prices and indirectly precious metal prices. The rising tensions due to the Iran unrest and demonstrations, as well as the continued geopolitical risk from North Korea, are adding to the safe haven demand for gold adding further near term support.
Later this week we will see the release of the ISM manufacturing index and non-manufacturing index, December motor vehicle sales, December jobs report and November factory orders. Unless there are large deviations from expectations, none of these releases should have much effect on the metals market.
For February gold, an open tomorrow above the pivot of 1,312.2 would show near term resistance at 1,319.9 while a breakout above this level would see longer term resistance at 1,323.6. An open below the pivot would have near term support down at 1,308.5, and a sell off below this would show longer term support at 1,300.8.
Bullion on Bullion.
** Call me for a complimentary consultation on any of your future and futures needs **
Michael Bullion, CAIA
Senior Technical Analyst
Walsh Trading, Inc.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.