Gold’s Re-ignited Rally and New All-Time New Record Close and High

Gold futures traded to within striking distance of the key and significant psychological level of $4,000 per troy ounce today. Gold reached another record high of $3,997. December Comex futures are in after hours, or overseas trading currently as of 6:24 PM ET within dollars of the Monday’s high at $3,994.30. This represents a gain of 1.85% or $72.30 on the Monday, with an additional 0.25% already added from Tuesday’s trading in Australia. 

While there have been analysts calling for gold to reach as high as $4,200 by years end most are cautioning that even with gold’s second wind shown by the strong increase in the pace and distance gold has been moving since breaking above $3,750 on Monday September 22nd there are plenty of signs that gold is nearing a price top. 

Gold’s second wind came in the form of a US Government shut down which has added to the flight from fiat currencies into finite assets. For the first time in decades central banks hold more gold than treasuries. Part of the problem is the world is beginning to call into question the stability and independence of the Federal Reserve and therefore the legitimacy of the money they print all day, every day.

This year’s strongest bullish catalyst has probably been the anticipated rate cuts by the Fed. The Fed’s monetary policy shifted towards accommodative after the labor market showed a steep decline in new jobs and a rise in new unemployment claims. Seeing as the Fed’s reason for future cuts would be directly tied to the labor market the shut down in Washington has brought more uncertainty in an already uncertain environment. This is because the shutdown has delayed the release of the Jobs report for the month of September which would have been released last Friday. 

Without this key piece of data that will certainly have a strong influence on the Fed’s funding rate at the October FOMC meeting. traders are left to speculate, removing certainty on gold’s strongest underlying bullish drivers and leaving apprehension in its place, a realm that gold tends to thrive in. 

The report will be released on the following Friday after the shut down is “turned on” meaning that it could easily be a week or more away. In the meantime until the US turns the “lights” back on expect gold to rise even further, but be aware that a swift fall could ensue after this latest catalyst has burned through all its energy. 

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