More Upside For Gold… Against The Euro
Dragonfly Capital | Mar 23, 2017 08:32AM ET
Gold has been trending higher over the last few weeks. Moving off of a low of $1200 earlier this month, it is now about $50 higher and looking strong. But with all the uncertainty and news to unfold in Europe over the next week, how does gold look priced in euros? Could this combination be the hedge to your European holdings?
The chart below shows the price of gold in euros over the last year. After the spike higher in June following the Brexit vote, gold has fallen back, retracing the entire move. That decline ended in February as the ratio broke above its falling channel. It moved higher to a top at the end of the month before pulling back. That pullback retested the channel two weeks ago and held, reversing higher. This is where the story starts to get good.
From that bounce gold priced in euro showed added strength. it is now breaking the 20 day SMA to the upside. It also has the power of a Positive RSI Reversal behind it. The March low was a higher low than at the end of January, and coincided with a lower low in the RSI. This set up suggests a stronger move higher and a target to a Ratio near 12.10. With no move in the euro this would mean a move from $1250 to over $1300 in gold. Conversely it would imply a move lower to about 103 in the euro from this morning’s 107.77.
DISCLAIMER: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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