Gold reaches 7-year highs

Gold reaches 7-year highs

Gold stretched its upside rally and hit a fresh 7-year high. Having surged by about 6% since the beginning of the year, and as we indicated last week, the precious metal look to be headed towards the 1625$-1635$ area.

Gold’s strength was confirmed last year after the break of the 1360$ resistance area and the positive signs are continuing to be revealed. The first positive sign is that the precious metal is continuing it’s impressive rally even as stocks climb and scale fresh records. The second sign is that the gold’s ascent is in fashion with the dollar’s upwards move, and the tow used to be inversely correlated.

Several factors support the gold’s strength, the most important of which is the commitment of central banks around the world to adopt expansionary monetary policies with low interest rates, and in an environment flush with central banks liquidity I expect gold to continue it’s surge towards the 1750$ area.