The gold price is taking a breather today after a rebound in the equities markets left investors exiting the safe haven asset in search of higher returns but many see this as a temporary setback and expect the precious metal to continue to climb higher.
This December marks the worst month for stocks in a decade and leaves them entering bear territory which translates to a nearly 20% fall from the most recent high so the turnaround was always going to generate a lot of interest.
“With the U.S. equity markets rebounding from a Christmas Eve sell-off, investors are looking to take more of a wait and see approach, and starting to pull a little bit out of safe-haven assets and potentially ship more into the equity markets,” said Josh Graves, senior commodities strategist at RJO Futures in Chicago.
Some see gold hitting $1300 relatively quickly and once that happens, the momentum will gather and a gain of another $50 will come shortly after.
A no deal Brexit may be the trigger for this move and this will be known when the UK parliament vote on the deal that Prime Minister Theresa May brokered in 2 weeks.
“Gold looks like it’s breaking out higher with a short-term target of $1,300 and medium-term target of $1,360-$1,370,” said Tai Wong, head of base and precious metals derivatives trading at BMO.
“More importantly the algorithmic trading programs which are practically all momentum followers will continue to push gold higher as the trend remains clearly up.” He added.