Another Gold Rally Imminent?
Gold Rally: Just Getting Warmed Up?
No doubt about it, gold has been a hot asset in 2016. Since the start of the year, the yellow metal has rocketed higher by the tune of 17.3%.
Believe it or not, the recent gold upturn makes it the top-performing commodity of the year thus far!
What’s more, it’s an impressive turnaround considering the bearish sentiment that has plagued the metal for years.
Can gold’s hot streak continue?
First of all, it’s important to understand why the metal is rallying in the first place. To put it simply, gold’s “safe haven” status is alive and well in 2016. Investors are flocking to the commodity as multiple economic fears come to the forefront.
Slowing global growth, debt worries in the energy space, recession fears- they’re all playing into the hands of gold bulls right now.
Speaking of gold bulls, investors pushed the metal beyond a very important technical roadblock in recent trading.
Take a look…
As you can see from this long-term chart, gold has finally broke free of the downtrend (green line) that has kept it under wraps the past few years. As loyal readers know, we’ve been keeping a close eye on this technical resistance area for quite some time.
I can’t be emphatic enough when I say this recent gold breakout is a big deal!
Why?
The bearish trend of the past few years has finally dissipated, giving way to a new trading approach towards the metal. Instead of selling rallies as they’ve done since mid-2013, investors will likely focus on buying pullbacks in gold.
Where does gold go from here?
Given the breakout in the chart above, there are very good odds of further upside in the yellow metal in coming months. In fact, I wouldn’t be surprised to see gold trading at the 200-day moving average (red line) by mid-2016.
However, it won’t likely be a smooth ride.
Remember, gold’s shine is coming from the worrisome economic data that has flowed in relentlessly the past few months. Should this data take a turn for the better, it’s possible gold retreats from the recent rally.
Here’s the key…
As long as gold stays above the green line in the chart above, there’s a high likelihood of further upside. But if the metal falls back below the green line, all bets are off.
No matter how it plays out, there will be plenty of volatility in the gold market in coming months. As a result, there’s a great opportunity for profits in gold miners and leveraged gold ETFs.
Until Next Time,
Justin Bennett
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
Category: Gold, Precious Metals
