Top Trade of the Week - GOLD

 

 

Top Trade of The Week

 

Markets were closed across the board on New Year’s day. When they re-opened on Tuesday we saw a big move to the upside in gold from about $1,306 to $1,318. Gold continued its fine form and had been pushing upwards for over 2 weeks up to this point.

You can see from the chart that a trend line break (marked in red) gave us a lot of confidence that the move would continue higher when the market re-opened.

Combining this with a weak US Dollar helped the situation:

  • A falling dollar increases the value of other countries’ currencies. This increases the demand for commodities including gold. It also increases the prices.
  • When the U.S. dollar starts to lose its value, investors look for alternative investment sources to store value. Gold is an alternative.

A nice combination of a trend line break to the upside and a weak US dollar made this the trade of the week.

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