Gold Breaks Through $1,300, Set To Push Higher In 2019

The gold price finally pierced resistance at $1,300 on Friday, hitting a 7-month high!

Why is this important?

The $1,300 level has been pesky resistance roughly 12 times over the past 3 to 4 years. A definitive move above this price is a bullish signal that could create a little FOMO (fear of missing out) in the gold market.

gold 1300

It is a psychological price threshold, but also has implications for paper futures traders. The bulls are optimistic that the Federal Reserve will leave interest rates unchanged this week. The Federal Open Market Committee meeting is scheduled for Jan. 29-30.

Growing risks to the global economy are also helping to push gold prices higher. Many of the world’s largest economies were already slowing, but the trade war between the U.S. and China has fanned the flames.

Even the IMF has warned that storm clouds are gathering for the next financial crisis.

David Lipton, the first deputy managing director of the IMF, said that “crisis prevention is incomplete” more than a decade on from the last meltdown in the global banking system. He went on to say that the global banking system is not prepared for another downturn…

“As we have put it, ‘fix the roof while the sun shines’. But, like many of you, I see storm clouds building and fear the work on crisis prevention is incomplete.”

Ominous, to say the least.

While investors initially celebrated the deal to re-open the U.S. government, many are starting to doubt that U.S. congressional negotiators will be able to forge a government funding bill acceptable to President Donald Trump. The agreement only opens the government for three weeks and then it will shut down again if no agreement is reached. Both sides seem dug into their positions and unwilling to negotiate funding for a border wall.

If the underlying cracks in the economy force a premature end to the Fed’s planned interest rate normalization and balance sheet reduction, it will send the dollar plummeting lower and gold shooting higher.

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