The market’s equity and crypto boom has left gold in the dust so far this year, but one spark could turn things around and take gold prices as high as $2,300 this year. Gold is back below $1,800 an ounce this week as prices struggle to maintain gains amid rising Treasury yields. Gold is down 3.5% in the last 30 days and down 7.5% in the past six months. At the time of writing, Next Months Comex futures were trading at $1,784.30, down 0.76% on the day.Despite this mediocre at best performance, I still remain extremely bullish on gold, especially considerting we’re about to see another $1.9 Trillion put into circulation.The real instigator of another leg up in prices will be the expectation around inflation, and certainly that is something that is raising heads of lately. We are starting to see energy prices rise. Freight container rates and shipping costs are also rising quite strongly. We saw PPI in China pick up recently. There is some concern that higher prices will start to manifest itself through the global supply chain as the global economy improves.
Right now, markets are not paying enough attention to inflation concerns which I feel rather certain that this might change in the medium-term.The Inflation story is bubbling away in the background, but it will start to gain more focus for investors. Inflation expectations are picking up, which would provide a solid support for investor demand over the medium term which will continue to benefit the gold sector.The Federal Reserve reiterated multiple times that it does not see inflation as a concern and is willing to let it run higher. This sets up an advantageous scenario for gold in the long-term.The Fed said they would rather see things overshoot. That is going to give plenty of scope for the continued reflation trade to play out. On top of the inflation factor, low interest rates along with more monetary and fiscal stimulus will keep gold prices elevated this year.
Our year-end price targets for gold is $2,300 here at GoldPro.So far, a variety of issues have been putting pressure on gold, including optimism around the vaccine rollout, economic recovery, and the crypto competition.The U.S. dollar strength in recent times has certainly been a significant headwind. The rising yields as well in the U.S. Treasury market. Also, buoyant equity markets. And you can’t ignore cryptocurrencies anymore. The cryptos are starting to have a larger affect as more institutional funds move into the space. That is probably taking a dent of gold’s appeal for a short lived time span as well.
The most significant short-term obstacle for gold has been rising 10-year Treasury yields. This is a signal that things are getting better, however we did see a pullback at the end of Friday.The economic recovery globally has had its ups and downs, but the vaccine rollout, further stimulus measures in the U.S. have raised parts of that recovery, accelerating it, and that most certainly is creating the largest bubbles we’ve ever seen . We are very much living in uncharted territories.On Saturday the house approved to pass the $ 1.9 trillion dollar stimulus that now moves onto the senate where it will have opposition, the Democrats are wanting this bill on the Presidents desk no later than 3/13/2021. With that tsunami of more liquidity being thrown into the markets, inflation is here and it’s here to take over which we all know is extremely lucrative for commodities especially the major 4 ( Gold, Silver, Platinum, and Palladium ). Make sure to do something today that you’ll thank yourself for tomorrow, 855-423-4653 or shop online at GoldPro.com.
