That was enough uncertainties to support gold beginning to rally off its November low.
Those uncertainties became alarming with this week’s surprise move by Switzerland’s central bank to abruptly end its long-standing and long-defended cap on its currency.
With the unexpected lifting of that restraint (no forewarning), the Swiss franc surged up in value. Switzerland’s stock market plunged. The fallout rocketed around the world, hammering global banks, currency trading firms, and foreign exchange (FX) investors with large losses. It has already triggered the collapse of some smaller FX brokerage firms, and raised fears of the turmoil spreading to other areas.
So gold’s rally seems to be supported by both a technical breakout and the fundamentals.
For the moment, it should be considered a promising intermediate-term rally, but not necessarily the end of gold’s bear market. That will be determined by how it handles resistance in the area of $1,400 an ounce, where its last two intermediate-term rallies topped out.
In the interest of full disclosure, my subscribers and I have positions in the SPDR Trust Gold etf, symbol GLD, and in gold mining stocks.
This article is brought to you courtesy of Sy Harding From The Street Smart Report.