Cramer Is ‘Spot On’ about Buying Gold, Technician Says, And It Could Add Another 10%
The comments below are an edited and abridged synopsis of an article Keris Lahiff
Gold is getting its shine back, having rallied more than 3% this month as investors sought shelter from a volatile stock market. The surge has even prompted praise from Mad Money’s Jim Cramer.
Market uncertainties, such as trade tensions and other geopolitical worries, tend to increase demand for safe-haven assets, gold being one of them. As trade war tensions have peaked over the last 3 months, gold prices have risen 6%.
And the rally could be just getting started, according to Craig Johnson, chief market technician at Piper Jaffray.
“Cramer’s spot on correct,” Johnson said last week. “It looks like we’re putting in a bottom here and it looks like we’re going to see this maybe 9% to 10% higher to get back to the old highs.”
“From our perspective I think we could see some weakness in the dollar in here given that the [Federal Reserve] might be less hawkish going forward, and that might be really the underlying driver as to why we’ll see the gold prices go higher,” said Johnson.
The US dollar and gold typically have an inverse relationship in which one falls as the other rises. Bullion tends to get a bid when the greenback falls, as it becomes a cheaper commodity to investors trading in other currencies.
