The State of the Gold Market And Where It May Be Headed

The comments below are an edited and abridged synopsis of an article by Lawrie Williams

In his Gold Monitor newsletter, Canada’sMartin Murenbeeld looks at the behaviour of the markets in the past week or two, which has seen US equities lose any gains they had made year to date. Gold, on the other hand, has been positive.

The State of the Gold Market And Where It May Be Headed | BullionBuzz

Much of the blame for what has happened to the dollar and US equities goes to President Trump’s trade war with China, which seems to have backfired.

Murenbeeld anticipates a weaker dollar going forward, a pause in Fed rate hikes, and a recovering equity market. Only the latter is mildly negative for gold, and it may be neutered by safe-haven interest in gold arising from the many geopolitical and other crises looming on the near, medium, and long-term horizons.

The Fed has already expressed doubts on the future pace of tightening, although the markets do not anticipate it holding off on the likely 25 b.p. interest rate increase at the upcoming FOMC meeting.

Murenbeeld does not see a US recession in 2019, and he sees US equities making a recovery, although he does see a recession in the future. But while rising equities may seem negative for gold, the effect of recent sharp drops (and the collapse of Bitcoin) has probably resurrected some of gold’s safe-haven asset appeal.

Murenbeeld sees the gold price climbing, with the first hurdle at $1,250. The next target may be the 200-day moving average, currently around $1,256. After that, major resistance is in the mid $1,280s. If gold can take this out before Christmas, it may be at $1,300, or higher, by year end.

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