As Gold Tops $1,400 oz…

As Gold Tops $1,400 oz…

$XAU, $GLD, $USD

FLASH: There has been a dramatic change in the sentiment of Gold Bugs

Bold prices have risen this month, passing $1,400 oz for the 1st time since Y 2013.

There have been good reasons to be Bullish the precious Yellow metal. Everything from Dovish central banks, technical indicators, negative-yielding bonds are all working in favor of higher prices.

Below are some Key reasons to turn even more Bullish gold as follows:

  1. The Fed opened the way to reducing interest rates this week, leading to a dive in USD. Central banks in Europe and Australia shifted the tone to easy policy ahead.
  2. More bond yields are turning negative, meaning there is greater appeal in gold over other safe haven assets.
  3. Geopolitical tensions hotted up. President Trump called off military strikes against Iran Thursday night.
  4. Huge sidelined money is coming back into the market. ETFs (exchange-traded funds) backed by gold have seen inflows jump since late May.
  5. Central banks including Russia and China have been and continue buying gold.

The enthusiasm is justified, with $1,500 – 1,600 possible in the next 12 months under a Bullish-case scenario that includes borrowing costs falling below Zero. Strategists at Australia and New Zealand Banking Group Ltd. joined in Friday, saying gold will remain a “highly relevant” portfolio diversifier.

In the longer term, a Key risk to the market is if the Fed does not follow through with US interest rate cuts.

UBS predicts 3 rate cuts this year, but the market is pricing in 3

Gold for August delivery climbed 4.1% on the week, posting the biggest gainer for a most-active contract since April 2016. The precious Yellow metal’s ascent to $1,400 faced resistance after US existing home sales topped estimates and as tensions with Iran dialed down.. But, by the end of trading Friday, bullion settled at $1,400.10 oz in New York.

Note: When the market goes up as fast as gold did over the last 3 weeks, you can expect pullbacks, but the trend will still remain up.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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