Gold surged above $4,000 per ounce early in the Asian Pacific session. So far, there has been little obvious profit-taking, and the gold price hovered just below $4,050 ahead of midday, European time. Gold’s rally accelerated in September after it broke above resistance and its old record high of $3,500 from April. But the daily MACD is now even more overbought than it was back then. Gold has risen in nine of the last ten sessions and set a new all-time high for ten consecutive trading days, an extraordinary stretch that has pushed year-to-date gains to 53%.
Source: TN Trader
This week’s rally has occurred even against the backdrop of renewed dollar strength. But as has often been noted, history shows that the negative correlation between the dollar and gold is a bit of a myth. Safe haven demand has been cited as a key reason for gold’s rally. But with global equities trading at all-time highs, and with no stress visible in the bond markets, gold’s strength is much more likely down to it being out of fashion and overlooked for so many years.
Now it is back in the spotlight, but difficult to trade at current levels. Following the mildest of pullbacks yesterday, silver resumed its rally overnight to touch $49 an ounce briefly this morning. It has pulled back a tad since then and continues to trade just below its record high near $50, from April 2011.
Silver is up around 65% year-to-date. It continues, like gold, to command strong buying from all corners of the market - industrial, institutional and maybe even some retail interest as well. The ongoing surge highlights the scale of demand rather than safe-haven sentiment, as momentum and positioning continue to overpower traditional valuation measures.
