Now Is The Time to Buy Gold as Negative Sentiment Is Exhausted

The comments below are an edited and abridged synopsis of an article by Neils Christensen

Gold is currently an attractive buy, according to Ronald-Peter Stoeferle, fund manager at Incrementum AG. He notes several factors that will lead to higher prices by year end.

The most significant factor is falling momentum in the US dollar; interest in the greenback is waning as the Federal Reserve moves closer to the end of its interest rate hike cycle.

Growing global economic uncertainty because of rising trade tensions could force the Fed to reverse course and loosen monetary policy.

Stoeferle sees the recent strength in the dollar as a short squeeze that is almost over, as investors were significantly net-shorting the currency at the start of the year.

The second factor to drive gold prices higher is growing volatility in developing and emerging markets, said Stoeferle. He added that at current prices, gold is an attractive safe-haven asset.

“Everything right now is going into equities and the market looks strong, but below the surface, cracks are starting to show,” he said. “I think the technical picture of the stock market doesn’t look very healthy, especially in emerging markets. Emerging markets are a mess right now.”

Finally, Stoeferle said that despite strong negative sentiment in the gold space, the metal has held up well. He noted that while prices are down, gold equities have not seen any major capitulation-type selloff.