Based on technical analysis by Denko Group traders, gold prices will take a break in gains before finding the high water mark.
Last weekâ€˜s trend line hold of the triangular consolidation that has been unfolding in the yellow metal over the past few months prompted the move high that was expected; however it seems to be finding the air a little thin above this landmark level as it has done on at least 2 previous occasions.
The key motivators to future gold price rises will be US dollar weakness, a perception about rising inflation, or inflation itself. Seeing as the only driver valid at the moment is US dollar weakness the nature of the rally seems a little unreliable and while we may see $1,040 it would be a surprise for any move to follow through markedly.
The surprising thing about this move is how Gold has moved in step with equity markets, when usually the opposite is true as investors flock to it as a safe haven in times of turmoil.
As a store of value it is of limited worth, adjusted for inflation it should be nearer to $2,000 an ounce than where it is now. Be that as it may while countries around the world are printing money like confetti, and in the process devaluing their currencies, the only real surprise is that it isnâ€˜t higher.
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