Gold Makes a Rare Golden Cross: What Does That Mean?



Golden cross

Gold rose 0.26% on Thursday, May 25, 2017, and ended the day at $1256.40 per ounce. The rebound in gold also extended to the other three precious metals. Silver rose 0.44% and finished at $17.20 per ounce. Platinum and palladium rose 0.55% and 0.97%, respectively, for the day.

Gold seems to have made a golden cross as its 50-day moving average moved ahead of its 200-day moving average. A gold cross is a rare phenomenon that occurs when a short-term moving average crosses a longer-term moving average. The golden cross is often associated with a substantial upward price movement and is considered a bullish sign for the asset.

It’ss possible that gold could witness some near-term resistance at $1,265 per ounce.

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Dollar movement

The rise in precious metals often occurs as the currency in which these assets are priced, the US dollar, falls. The U.S. Dollar Index (or DXY), which prices the dollar against a basket of six major world currencies, fell 0.64% over the past five trading days. Precious metals have scaled during that time frame. Metals that are greenback-based often rise as the US dollar (UUP) tumbles.

That’s because investors from other countries find the dollar comparatively cheaper to invest in, and thus dollar-based assets see their demand increase. The gold-based fund, the iShares Gold Trust (IAU), rose 0.58% over the past five trading days.

Mining shares that followed rising precious metals on Thursday, May 25, 2017, include Aurico Gold (AUQ), Pan American Silver (PAAS), Hecla Mining (HL), and Royal Gold (RGLD). These four miners rose 3.6%, 0.98%, 0.34%, and 0.34%, respectively, on Thursday.


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