Commodities have gained more attention as an investment asset class in the last year or two, but commodities could garner more attention as gold futures are testing the critical $1,000 level.
Gold futures nearly hit $1,000 an ounce on Thursday and closed a few dollars lower on Friday near $994 an ounce. The action on Friday setup an inside day, which means the trading range for the day was inside the range of Thursday. This usually leads to a breakout move the following day and the odds point to a move above $1,000. This makes sense as we are going into a long holiday weekend and markets often make a big move following a long weekend.
Silver is also trading above $16 an ounce and following on the coattails of the gold market. Gold is the main focus and seeing how it reacts around the $1,000 level is critical. I would expect a strong move above this level and maybe a run of $100 to $200 higher into December. A quick reversal from the $1,000 level could send traders running for the exits.
I would watch for some negative economic releases at the end of Friday from the government. They are getting in the habit of releasing their bad news when the most people aren’t paying attention – like a long holiday weekend. This could support the bullish case in silver next week if this wave of buying is at least partially due to flight to quality investments.
Interesting post. It’s not surprising that people are moving their money out of the paper assets. The governments seem quite happy to devalue their currencies. They almost seem to be in a race to do it. I think Sterling will get there first.