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.
CM Trading are here to help you on your trading journey. Get access to our 6-part online “Make me a Trader’’ Program to help you identify these type of trades.
Click below to find out more: