Analysts and economists are calculating the destruction the C-19 coronavirus chaos, and traders in the financial markets trying to understand the ramifications of the virus’ presence.
The market trends demonstrate that our prior precious metals forecasts continue moving North in tandem with stock markets as they point toward marking new record highs.
Spot gold is trading near its highest levels in 9 yrs and investors holding the SPDR Gold Trust ETF (NYSEARCA:GLD) have seen gains of about 25% since 16 March 2020.
The prospects for continuing global uncertainty suggest that this upward trend could continue for some time to come, and at least into year’s end.
Notably, the Bearish outlook has been for the most part out of the markets.
Over the last 3 months, the SPDR Gold Trust has been driven by inflows of nearly $11.8-B and I have not seen selling pressure since early June.
Bolstering the prices in gold and silver is central bank aid/relief/stimulus has reached very high marks that could bring on inflationary trends that leave paper (fiat) currencies trading under pressure for extended frames.
As a result of recent central bank decisions, asset purchases that have already been pledged by global central banks as a response to the C-19 coronavirus chaos have reached marks thought inconceivable just a few months ago.
Recent measures undertaken by the Fed, ECB, and RBA has governments to continuing aid/relief/stimulus measures to calm economic uncertainties.
The massive global central bank stimulus suggests that the market’s deep concerns should be expected to continue and the current prospect of low and/or negative global real interest rates create another element that support precious metals with high liquidity during the next few Quarters.
Changes in interest rates have been widespread and even countries with relatively low C-19 coronavirus infection rates have been forced to adapt monetary policy in ways that favor precious metals investment as a preferred safe-haven.
Technically the price of GLD has been supported since 141.64. Since the end of March, this area has been viewed as a zone of historical support, and re-tests of this price zone can be viewed as a strong Bullish signal for those considering new buy positions in the ETF.
SLV (NYSEARCA:SLV) has strong support since marking 11.32 on 19 March and is currently trading at 17.99.
Both precious metal ETFs have no overhead overhead resistance and deep support now.
Central bank stimulus indicates strong prospects for sustained reductions in global interest rates, this support the Bullish argument for precious metals instruments like the SPDR Gold Trust.
For these reasons, I believe precious metals markets have established this strong winning streak and sustained economic uncertainties indicate the upward trends will continue for the rest of this year, at least.
Monday, the major US stock market indexes finished at: DJIA +10.50 at 26085.80, NAS Comp -226.50 to 10390.94, S&P 500 -29.82 to 3155.22
Volume: Trade on the NYSE came in at 1.0-B/shares exchanged
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias in here
- NAS Comp +15.8% YTD
- S&P 500 -2.3% YTD
- DJIA -8.6% YTD
- Russell 2000 -15.9% YTD
Looking Ahead: Investors will receive the Consumer Price Index for June Tuesday.
Have a healthy day, Keep the Faith!