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USAGOLD/Peter A. Grant/01-13-17
Gold dipped modestly in early New York trading, but has since adopted a more consolidative tone just below $1200. The yellow metal appears poised to gain just over 2% this week, which would be its third consecutive weekly gain.
The surge earlier in the week to a 7-week high of 1206.93 lends considerable credence to the bullish technical tone that is developing. Gold is now comfortably above the 20- and 50-day moving averages, as well as the 20-week moving average. Momentum remains clearly to the upside.
We like the fundamentals as well: Physical demand in both the east and west is back on the rise. Recent U.S. economic data have been mixed, which is tempering the post-election optimism. This is also weighing somewhat on expectations that the Fed will hike 3 times this year.
The World Bank is forecasting 2.2% GDP growth this year. Atlanta Fed President Dennis Lockhart thinks it will be more like 2%, noting that it is difficult to predict what impact any fiscal stimulus might have at this point. That’s pretty anemic more-than 7-years into the recovery.
President-elect Trump chose not to elaborate on infrastructure spending during his highly anticipated press conference earlier in the week. That seemed to really disappoint investors.
The Dow has failed to satisfy the 20,000 objective, even as the national debt continues its unstoppable march to $20 trillion. Expansion of the money supply is accelerating as well.
It all paints a generally favorable picture for gold and hearkens back to January of 2016, where we saw a similarly impressive start to the new year. The 2016 rally lasted until midyear, wracking up gains in excess of 30% before the corrective pressure emerged.
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