Gold is in a bull market, but all bull markets have corrections. There was virtually nobody bullish on gold in mid-December at the lows. Now the bulls are coming back, just at the wrong time, of course. But we are still bullish overall, it’s just the entry point sucks now. The current reaction is needed, and we’d like to see silver follow gold in also correcting. Have your favorite miners on a list, and use any extreme weakness to layer in – not all at once.
Political concerns in Europe, uncertainty over US economic policies and a reversal of the “Trump reflation trade” are factors that could push the gold price above US$1,300 an ounce this year, according to Citigroup.
Gold’s spot price has been steadily marching higher since its December low of $1,128.20/oz.
However, it remains about $100 shy of its September high of $1,349.40/oz, this morning trading at $1,252.90/oz.
Citigroup’s head of metals research David Wilson told Bloomberg TV there had been renewed upside pressure on the gold price.
“Suddenly we see this week concerns about whether (economic) policies will be pushed through this year or not… and then we look across the Atlantic,” he said.
“Political concerns in Europe and where Europe’s heading are adding to risk concerns and upside momentum to gold.”
US president Donald Trump is due to address Congress tonight and is expected to provide more detail on his spending plans.
Another factor boosting the precious metal was the 63 tonnes of gold added to ETF positioning last week.
Wilson told the program gold was partially constrained by the broad view that the global economy was “still motoring along okay” and there was no confluence of risk issues to drive it dramatically higher yet.
“We will see gold go higher for sure,” he said.
Leave a Reply