Gold prices are mixed early this week, with February Globex gold futures down 8.5 points in Monday trading, to 1,225.9, while March and April gold futures were down 8.9 and 9.0, respectively (to 1,226.2 and 1,227.0.)
In early Tuesday trading, gold bounced back to 1,227 per ounce, as prices rose ahead of Federal Reserve Chair Janet Yellen's testimony in front of Congress, where she held the line on "gradual" interest rate hikes going forward. During midday trading on Wednesday, March and April contracts were up 6.3% and 7.7%, respectively.
Volatility is a trend that bears watching, say gold experts, as gold prices are up 10% since mid-December, 2016 lows, but they are starting to veer downward in mid-February.
"Now that everyone is catching on, I think gold could soon meet overhead resistance," states John Ross Crooks, a commodities, currencies and options trader, in a research post on Uncommon Wisdom Daily this week. "In fact, I'll be looking to sell gold -- or wait for a new buying opportunity -- if the current rally hits a range between $1,277 and $1,288."
There are a few key indicators gold investors should measure before making any big moves on either side of any trade, gold specialists.
"Investors should be watching closely for action in the dollar and ten-year treasury yields, as they both seem to move the price of gold every step of the way," notes Walter Pehowich, vice president of investor services at Dillon Gage Metals.
"As of today, the price of gold is under pressure as the dollar index approaches the 101 level again and ten-year bonds yields advance," adds Pehowich. "Currently, the price of gold is trading below the most recent support level at $1,228 and approaching a double-bottom in the charts at $1,222."
If the selloff continues, Wall Street will be watching for the 100-day moving average at spot $1,216.25 before jumping back into the market, he adds. "If the 100-day moving average is violated, selling will accelerate bringing new shorts into the market place and the Wall Street longs will have to cover quickly," Pehowich says.
Some commodities experts advise gold investors to take a few deep breaths and have some perspective - gold prices are historically volatile, and the recent two months of trading have proven that.
"During 2016, gold markets shook off three consecutive years of price weakness," says Trey Reik, senior portfolio manager at Sprott Asset Management.
"However, the gold complex suffered meaningful correction during the fourth quarter," he adds. "As is frequently the case in the gold sector, short-term sentiment is generally more reflective of recent price action than underlying fundamentals. Despite the recent pullback, we believe the investment opportunities for gold remain compelling."
Reik doesn't fall in with the growing number of doomsayers who predict a rocky road for global economies, especially in the U.S.
"Our investment thesis for gold does not involve financial Armageddon, Weimar Republic inflation or a collapse of the U.S. dollar," he says. "Rather, inevitable resolution of epic monetary and financial imbalances is likely to accelerate the rate of capital migration from global financial assets towards gold and other precious assets in the relatively near future. Given the comparatively tiny stock of investable gold, we expect gold's price to stabilize at significantly higher prices."
It's worth noting that gold is like any tradeable asset; it can reach exhaustion points in both the short and long term, even if the fundamentals are bullish, says Jeff Clark, analyst at GoldSilver.com. "On the other hand, gold's impressive year-to-date advance is eerily similar to 2016 - if it were to match that performance, gold would climb another 20% and not peak until July," he says.
The objective, Clark says, is not to get caught up in the periodic plunges and pop-ups on gold prices.
"The purpose of gold is rarely about short-term events," he points out. "The current fundamentals for gold argue for not just much higher prices over the long term, but for holding a hedge against numerous systemic risks, including currency depreciation, the ongoing uncertainty of Trump's effectiveness, and concerns over poor economic growth in Europe."
Those issues won't shake out anytime soon, giving gold investors plenty of time to mull over their next move - even as futures prices gyrate yet again this week.