Tag: financial

September 3, 2021

The U.S. dollar losing steam?

Gold needs a catalyst to jump out of the $1,800 zone, and U.S. dollar weakness might be the answer.

Key Takeaways:

  • Gold’s 200-day moving average and 50-day moving average are headed for a “golden cross,” which might be enough to push gold above the $1,837 resistance zone.
  • Goldman Sachs predicts that the U.S. dollar index has very limited upside potential – all the positive news has already been priced in.
  • The United States’ Afghanistan exit has damaged the nation’s reputation, further deteriorating the post-WWII Bretton Woods economic system where the dollar is king.

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August 27, 2021

A beautiful bounce, but will gold continue?

As the gold market approaches a period of seasonal strength, investors will be watching for a higher high.

Key Takeaways:

  • Gold has jumped back up to its $1,800 trading channel after putting in a higher low at $1,690.
  • Historically, September has been gold’s strongest month in terms of price performance. Next month could follow suit.
  • The U.S. Dollar continues to strengthen against other currencies, making gold more expensive for foreign investors and threatening gold’s rally.

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August 13, 2021

Gold’s flash crash

The recent plunge and subsequent rebound have extended gold’s bearish correction phase in the middle of a long-term bull market.

Key Takeaways:

  • A positive jobs report triggered a $130 drop-in gold last weekend. The price quickly turned back around, supported by Congress’ latest trillion-dollar spending proposals.
  • Gold failed to break through its $1,680 floor, once again showing the strength of this support level.
  • We are experiencing a short-term correction in the middle of a bull market. Looking back at other mid-bull corrections, we see that this phase has actually been quite shallow. Now is the time for investors to add to their gold position at a discount.

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August 5, 2021

Gold looks strong, but struggles to hold gains

Gold has been stuck in a $40 trading range for over a month, building a base around the $1,800 level and looking toward higher highs.

Key Takeaways:

  • Gold has been trading sideways for a month, but external pressures are mounting to push gold back into its long-term bull market.
  • In August 2020, gold began a retracement phase. It looks like that ended in March, but we need a few higher highs to confirm the end of this bearish phase.
  • The government is fighting to either re-suspend or raise the debt ceiling, which is bearish for the U.S. Dollar and bullish for gold.

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July 30, 2021

Gold Bounces on U.S. Dollar Weakness

Gold took a $35 jump after struggling to escape the $1,800 range, alongside strength in equities and cryptocurrency markets.

Key Takeaways:

  • If gold puts in a higher high on this rally, the price would be on its way regain June losses.
  • The U.S. Dollar Index dropped below its rising channel after the RSI divergence last week, giving gold a boost.
  • Companies are protecting their margins by passing higher costs to consumers. Despite record inflation, consumer demand for goods has also been rising.

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July 16, 2021

The Real Risk of Inflation

The fallout from COVID-19 may be reversing the long-term trend of low inflation, which has dominated the U.S. economy for decades.

Key Takeaways:

  • The CPI surged almost 1% in June, the fastest rate in 13 years. Consumer prices have risen 5.4% over the last year.
  • Two variables that have helped suppress inflation for decades might be reversing, which will create major problems for a financial system that runs on cheap money.
  • As global markets face the risk of exorbitant public debt combined with rising interest rates, investors are starting to reconsider portfolio allocation strategies.

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July 9, 2021

Gold Sets the Stage for its Next Rally

As inflation metrics continue to break records, the U.S. dollar could be reaching a breaking point.

Key Takeaways:

  • Gold has been rising steadily for the past week, recovering from its $100 drop-in June.
  • Existing home prices have increased 24% over the last year and rent is up 9.2% in 2021, yet CPI only reflects a 2.2% increase in housing costs. When will CPI catch up?
  • Premiums on some precious metals products at record highs, reflecting a heavy increase in consumer demand for gold and silver.

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July 2, 2021

Bullish Indicators Balance the Bad

In both the stock market and the precious metals markets, investors face a paralyzing collection of bearish and bullish evidence. Everyone is looking for the asset that will emerge as the winner in this new era of finance.

Key Takeaways:

  • Gold continues to show some weakness following its recent drop. It looks like it might be headed to retest the March lows, but several indicators are signaling a bullish reversal when or before it gets there.
  • The stock market is as white-hot as the housing market, but some money managers worry equity valuations are in a dangerous position. Stocks look priced to perfection, meaning any shock to the system could trigger a major correction.
  • The next couple of weeks will provide some excellent entry points for gold investors. Precious metals are providing a rare pocket of value in today’s extremely expensive financial ecosystem.

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June 25, 2021

A $100 Drop Halts Gold’s Bullish Trend

Gold bounced off the 50% correction line after last week’s plunge. The metal’s next move will either strengthen the bullish reversal or signify a continuation of the 10-month bear market.

Key Takeaways:

  • Expectations for rising interest rates buoyed the U.S. dollar and halted the recent rally in precious metals prices.
  • Gold has formed a reverse head and shoulders pattern, which typically indicates a bullish reversal. If the pattern holds, gold could continue the upward stair-step that began in March.
  • The U.S. dollar rose 2% against other currencies last week, but the currency remains in a long-term bearish trend with little chance of a reversal.

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June 17, 2021

Fed Discusses Interest Rate Hikes

Gold took a hit this week, alongside the stock market, after Jerome Powell announced the Fed’s plan to mitigate hotter-than-expected inflation.

Key Takeaways:

  • After Wednesday’s highly anticipated Federal Open Market Committee meeting, Jerome Powell announced a plan to raise interest rates in 2023 to curb rising inflation expectations.
  • The U.S. Dollar rallied on the news, while gold and the stock market indexes reacted with steep drops.
  • Expectations of rising interest rates can hurt gold in the short term, but history tells us gold ultimately thrives in the inflationary environment that requires rate hikes.

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May 27, 2021

The Gold Rotation: Institutional Investors Seek Stability

After surging past several resistance points on its climb to $1,900, gold continues to shine in a financial ecosystem wrought with volatility.

Key Takeaways:

  • Hedge funds, money managers, and retail investors are starting to rotate back into gold as cryptocurrencies falter and the stock market gives warnings of an inflection point.
  • This safe-haven demand is reminiscent of the forces that pushed gold to its all-time high in August 2020.
  • The other flagship precious metals – silver, platinum, and palladium – are also showing strength as rising commodities prices underpin gold’s bullish performance.

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May 20, 2021

Risk Assets Sell Off as Gold Hits a 3-Month High

Investors sent hot technology stocks and cryptocurrencies tumbling downward this week, increasing safe-haven demand for gold.

Key Takeaways:

  • Gold is holding steady around the key resistance level of $1,885, following two months of higher highs and higher lows.
  • The Dollar Index dropped below 90 for the third time this year and took a weak bounce, desperately trying to stay above 2018 support levels.
  • Gold is catching some safe-haven demand as the equity and cryptocurrency markets begin to price in the risk of inflation, interest rate increases, and bursting bubbles.

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May 13, 2021

Gold Marches Higher Amid the CPI’s Shocking Jump

Gold is continuing its short-term bullish pattern as year-over-year consumer inflation reached a shocking 4.2%.

Key Takeaways:

  • Gold is up $30 since last week, showing steady gains off its double bottom in March.
  • Yesterday, the U.S. Bureau of Labor Statistics reported a 4.2% increase in prices year-over-year, surpassing expectations and prompting a 3-day stock market selloff.
  • The U.S. Dollar Index bounced off 90 and remains half a point below last week’s level.

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April 8, 2021

Gold Approaches a Breaking Point

Gold put in a double bottom at the key support level of $1,680, and is now experiencing some bullish action to the upside. Did gold finally turn around?

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