In looking back a week ago to “Gold’s Narrow Trade; Beware a Cascade”, prices since breaking away from such narrow trading range did come true — right on cue — and up price flew. As if  it was foretold by the sybyl, here’s our updated view:

Such expansion of range was clearly due, but it was over direction that we did stew. Remember? “Up or down?” Gold was on a knife’s edge at this time a week back, then priced at 1314 right where the dip buying brigade had time and again saved the day, but with the technical picture inferring “down” as the way. And to be sure, Gold began the week en route to nearly test the year’s low (of 1304), reaching below 1307 pre-Fed decision. But then came the goods that give Gold the bids, all of which we can cluster together under the umbrella of the “U-word” — Uncertainty, such as to include:

  • The guidance from the Federal Open Market Committee for a further waxing of FedFunds rates this year, (this latest hike being into the 1.75%-2.00% target range), seemingly … no, assuredly … with a blind eye to the waning Economic Barometer (as we’ll below see);
  • The testy and twisty tactics of “don’t touch me with your tariffs”  talk … “Dollar Down! Dollar Down!”;
  • The trillions of unfunded Dollars, in this case nearly one-and-a-half of them, added onto the Congressional spending stack;
  • The fallout of the equities market, the S&P 500 in continuance of what we still see as a 25% correction from our 26 January “Blow-Off Top” at 2872 through the present 2588 level en route to 2154 this year. For as always, always, always has happened when the Index’s price/earnings ratio is as ridiculously high as it is (our “live” reading at this writing being 53.0x), it ends badly.
  • And thus Gold posted its best weekly gain year-to-date by both points (+33) and percentage (+2.5%) in settling out the week yesterday (Friday) at 1347. That level is just 18 points below the year’s high so far of 1365, and 30 points away from Base Camp 1377, above which we expect the BSR (“Buy Stops Riot”) to further send Gold up to our conservative forecast high for this year at 1434. Need we say more?

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