Both gold and Japanese yen have acted as the same asset class for practical purposes since 2011. However, early signals show gold beginning to outpace yen. Investors should not underestimate the impact that a more significant breakdown in this ratio will have on gold prices. We expect a major gold advance to coincide with a break of the lower boundary of the correlation.
It is often said that in market analysis: “volume precedes price movement.”
Gold has just posted its highest quarterly volume of all-time for futures trading history, for the quarter ended September 30. The closing data shows that for the period, over 17.5 million contracts traded hands. This eclipsed the previous record volume by a whopping 3.5 million contracts. What’s more, the new record surpasses the number of contracts that were traded during the quarter in which gold made its all-time price high of $1,923 per ounce, which came in Q3 of 2011.
Something is happening here in the gold market, for those who would pay attention to the hints now presenting themselves.
Gold is retesting its 2016 – 2017 consolidation breakout, and the decline seen over the previous two weeks provides an ideal opportunity for precious metals investors to make final purchases before the technical model suggests that 2016 highs will be exceeded for good.