Precious metals analyst says there are too many favorable factors for gold not to flourish.
Eyes were on the $1,300 level as gold began climbing around the start of 2019, as it was considered a key level of equal psychological and technical importance. Gold eventually showed that it could stay well above $1,300 an ounce as it looked ready to take on $1,350 in the weeks to come.
Meanwhile, some analysts predicted a pullback given the amount of gold’s upwards momentum. But the same analysts also said the metal would jump right back up, and that a pullback was a natural part of the metal’s chart trajectory. These predictions proved correct as gold briefly retraced.
After gold went below $1,300 an ounce, Metal Bulletin precious metal analyst Boris Mikanikrezai shared his thoughts on why the gold market is merely seeing a slight churning of the waters. In his Wednesday post on Seeking Alpha, Mikanikrezai noted that gold indeed faces plenty of selling pressure after the metal’s explosive rally.
Like many others, Mikanikrezai predicted that the dip below $1,300 would be a temporary one, urging gold investors not to worry about any pullback in the near-term, according to a recent Kitco article. It didn’t take long for Mikanikrezai’s words to materialize, as gold has trended steadily up since then. The metal briefly touched $1,300 once again and will now aim for a better foothold above the level, reports Kitco.
This mission seems easy enough to Mikanikrezai, as the analyst noted that there are simply too many favorable factors for gold not to flourish. As predicted in his post, investors appear to have picked up right where they left off in this year’s increasingly risk-averse climate.
Out of the various tailwinds propelling gold to new heights, Mikanikrezai singled out equity volatility as a determining one. During its historic run, the equity market was seen as the gold markets’ biggest competitor as it lured investors in with the promise of quick and easy returns, writes Kitco. But the decades-long period of “easy money” in U.S. equities appears to have ended and a couple of flash corrections left stock traders wondering what’s next.
While some insist that the crashes aren’t alarming, others warn that they are a herald of another recession. Although the latter scenario would certainly benefit gold, Kitco reports the metal has already reaped the rewards from a wobbly stock market and the ensuing rush to safety. Mikanikrezai sees defensive positioning becoming a common theme throughout 2019.
Beyond that, Mikanikrezai thinks that gold’s superb demand picture will turn even better as the current U.S. business cycle is brought to a close. According to Kitco, gold’s remaining fundamentals should help speed along the metal’s recovery from its first hitch in a months-long hot streak.