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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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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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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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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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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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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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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Gold’s Moment of Truth

Gold bounced off a key support level last week, and continues to hold its gains after the Fed’s announcement to maintain easy money policies.

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Triggering Gold’s Next Leg Up

Gold is continuing its lackluster short-term performance, but the fundamentals are now shaping up to trigger the second phase of its massive bull market.

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