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Week Ahead, April 20

Short Description

Gold prices just hit 7-year highs for the second time this year. Can the gains be sustained or is the price about to tumble? We discuss this and what to look out for in next week’s events from Amazon and Netflix earnings to the economic calendar.

Video Script

Hi Everyone, I’m Rich – your regular previewer of the week ahead in markets!

I have been getting a tonne of questions on gold- which is not surprising because it just hit 7–year highs for the second time this year! Of Course what you all want to know is -Can the yellow shiny metal keep going up or are we just setting up for another big tumble? I will reveal all very shortly. I will of course also give you a summary of the top things to watch out for this week in the economic calendar but before I do, can I ask that if you’re enjoying this video so far, click that like button with all your might. 

It’s worth mentioning upfront, that Netflix and Amazon are reporting their first quarter earnings this week, which could be big drivers for stock indices- especially the Nasdaq. Netflix is Tuesday after the close on Wall Street and Amazon is Thursday. As far as economic data I’ll be watching for rising UK unemployment in March, US oil inventories for signs they are running out of storage – check out my video from two weeks ago if interested on that topic, PMI data from France and Germany. And on Friday crashing US Durable Goods orders caused by a big drop in aircraft orders from airlines, which just got a government bailout in the United States.

Now, listen I’m not a soothsayer for the gold market –but in my opinion – any price breaking out to a 7-year highs is bullish for the simple reason it that it must be a strong market to get that high. BUT – you knew one was coming right? – when the breakout comes not long after a big drop from that level – you have the potential for a failed breakout and a top in the market. In gold, we put in a high at 1700 dollars per ounce on March ninth – now we just broke above 1700 a month later on April thirteenth. I’ll be watching 1700 like a hawk to see if we hold it.

Fundamentally, gold is always thought of as haven asset. That means gold should rise in times of uncertainty and fall when markets are more optimistic. What’s interesting is that when gold started that big drop from March 9, it was when stock markets started to really crash. Now it has rebounded but it has done so alongside stock markets. So it’s obviously not acting as a haven while it moves in concert with stocks, which are inherently risky. The common denominator is the US dollar. In the March crash, the dollar was rising and in the last few weeks it’s been falling. If the dollar starts to strengthen again, this gold breakout will be more at risk while a weaker dollar helps keep the gold bull market alive!

Good luck with trading this week, and make sure to subscribe so you can tune in for next week’s video


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