Gold remains one of the best charts I can see out there right now. There’s some resistance around US$1,960–2,015, which could lead to a short-term correction, but the long-term charts are looking the most bullish in years.
A breakout above the all-time high in gold could lead to a sustained rally, so investors should use any correction in the gold price from here as a buying opportunity in gold stocks.
The situation in equities is a difficult one, technically because of the divergence opening up between US and Australian stocks. I show you a long-term chart of the NASDAQ in the Closing Bell video today and although the short-term rally is gathering steam and could head higher, there’s still plenty of stiff resistance above.
The ASX 200, on the other hand, is performing extremely well and looks set to test the all-time high within weeks.
We should expect to see a strong surge in the ASX 200 if a new all-time high is created. But with US markets still in long-term downtrend and the Fed still talking tough about their desire to chase down inflation, we need to remain wary that a sell-off in US markets could dampen any upside momentum in Australian stocks.
The old saying of ‘sell in May and go away’ may be prophetic this year as bullishness gets snuffed out by the reality that the Fed still has work to do, and the higher the growth remains in the US, the higher the probability they will keep raising rates until something cracks.
Until next week,
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Murray Dawes,
Editor, Money Weekend
