Higher Highs And Pullbacks - Gold Is Sitting And Waiting For The Fed
London (June 15) The gold market is waiting patiently for the next Fed meeting. Gold has been trading in a range between $1046.20 and $1377.50 since December 2015. The correction from the all-time high in 2011 took the price of the yellow metal from $1920.70 45.5% lower from the high to the low. The $331.30 range over the past three years and one-half years caused hope and disappointment for those looking for the precious metal to resume the bull market that began in the early part of this century and took gold above the 1980 peak in 2008. Gold has not ventured below $1000 per ounce since 2009.
The gold market has not only appreciated when it comes to the US dollar price of the metal. It has also moved higher in euro, yen, and most other currency terms since the turn of this century. The rise in the price of gold may not reflect the value of the precious metal as much as it has been a commentary on the decline of fiat currencies. Gold is both a metal and a currency instrument. Central banks around the world hold gold as part of their foreign exchange reserves, and the metal has been a means of exchange long before any of the forms of legal tender in circulation around the globe today.
If gold is preparing to move to higher heights, gold miners extracting the metal from the crust of the earth could see their share prices move significantly higher. The VanEck Gold Miners ETF product (GDX) holds shares in many of the world's leading gold mining companies.
A new high for 2019
On Friday, June 14, the price of the August gold futures contract traded up to $1362.20 per ounce.
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The daily chart of August futures highlights that the price surpassed the February 21 peak at $1361.50 on the active month futures contract last Friday and that both price momentum and relative strength have moved to overbought territory with the price at around the $1345 level on Friday, June 14. Open interest has moved higher with the price since May 30. Since then, the price of gold moved from a low at $1279.20 to the $1345 level, a rise of 5.1%. The total number of open long and short positions in the gold futures market rose from 443,231 to 511,471 or 15.4% over the same period. When the price of a futures contract rises alongside increasing open interest, it is typically a technical confirmation of a bullish trend. Gold made a new peak for this year on the August contract, but did the same on the continuous futures contract on June 7, one week earlier.
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