Gold has been sucking wind this summer, trudging along after getting slammed by a distant-future-rate-hikes scare. The resulting lower prices have really damaged psychology, leaving investors wavering on gold. Their recent capital inflows have reversed into modest selling, contributing to unusual weakness in this leading alternative asset. But investment demand should roar back in this inflationary environment.
Gold entered summer 2021 with strong upside momentum, in a young upleg that had just powered up 13.5% in 2.8 months by early June. This current interrupted upleg is the fifth of gold’s secular bull, and the previous four
averaged big 33.3% gains. Gold was progressing nicely until the June 16th meeting of the Fed’s Federal Open Market Committee. The FOMC was expected to do nothing, and that’s what it did.
Gold Price Summer Doldrums :: The Market Oracle :: marketoracle.co.uk - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from marketoracle.co.uk Daily Mail and Mail on Sunday newspapers.
Gold Mining Stocks Fundamentals :: The Market Oracle :: marketoracle.co.uk - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from marketoracle.co.uk Daily Mail and Mail on Sunday newspapers.
This young gold-stock upleg is accelerating, with fast-rising prices enticing in more capital. This sector has surged sharply to multiple major upside breakouts in recent weeks, which is starting to turn skeptics into believers. Despite their strong upside momentum being chased, gold-stock prices remain far from overbought levels warning of impending selloffs. This mounting upleg still has great room to power way higher.
Gold miners’ earnings are highly leveraged to prevailing gold prices, which drive this sector’s upleg and correction cycles. In early March as the last extended gold-stock correction was bottoming, I wrote an essay on gold’s momentum selloff. It concluded with “the gold-futures selling that ignited all this is finite, and is likely nearing exhaustion. After that, gold should rally hard.” We were positioned for a new upleg.