Gold Hits Two-Year Year High
(Kitco News) - In December, we suggested that the gold price was beginningto exhibit the same patterns we witnessed in 2016 and 2017, when gold began asignificant uptrend in the first half of those years. The primary catalyst forthis year's stellar run has been the weakening dollar and Treasury SecretaryMnuchin's comments that a weak dollar is a positive for U.S. growth. which has accelerated the dollar's decline. TheEU and Japan are not thrilled with a strengthening euro or yen, which will hurttheir export trade, but other than directintervention to slow the dollar slide,raising rates are not yet viable options. A weaker dollar also suggestspossible acceleration in the inflation data in the U.S. as higher prices forimports and rising commodity prices driven by the weaker dollar should work itsway into the economy. It is unlikely the Fed will be aggressive in the firstquarter of 2018, with the equity markets at lofty valuations. The key levelwhich we pointed out after gold broke the $1,322 level was the double top of$1,365, which themarket achieved in 2016. We hit that mark in overnight trading. This level iskey for the next leg higher and a break through the 2016 top suggests a printof $1,425. At this level, a flat position is suggested, with re-entry on anupside break. Support lies at the $1,345 area.
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