The gold market is moving higher again on Friday, touching a six week high. The latest reading of Q2 GDP was released early this morning, and showed a growth rate of 2.6%. Some estimates were looking for a reading of 2.7% following a very lackluster first quarter growth rate of just 1.4%.
This report would seemingly add fuel to the dovish camp regarding monetary policy, and may act as yet another reason for the Fed to keep rates relatively low.
The Fed has tried to maintain a somewhat hawkish posture in recent months, but the last several weeks have seen a resurgence of dovish commentary. It is now expected by some that the next potential rate hike from the central bank will not be seen until December.
The dollar index may be the big story for gold investors here. The greenback is trading solidly lower in the aftermath of the GDP data, and continues to remain on its heels. In fact, the dollar is trading at the lowest level in over year, and right now there appears to be no signs of a bottom being reached.
Further dollar weakness may keep gold and other dollar-denominated assets moving higher, and may potentially keep any dips in price to a minimum.
Gold may also be catching a larger bid as stocks are finally showing some real signs of topping. The market could be in the midst of a major reversal in trend and price action has gone sideways to lower in recent sessions.
As we have stated in previous commentary, the stock market could potentially be a major catalyst for a significant upside breakout in gold. The equity market bull run is arguably very long in the tooth at this point, and any signs of a top being reached could make equity investors very anxious.
Given the rate of climb seen in stocks in recent years, the rate of possible declines could be astounding. As the saying goes: “Markets take the stairs up but the elevator down.” A full scale sell-off in stocks could potentially see hundreds of billions in shareholder value wiped out in a very short period of time. The great sell-off of 2008/2009 is a good example.
Given the current market risks, lackluster growth and possibility of ongoing dovish monetary policy, now may be the ideal time to add further diversification to your holdings and prepare for a bear market in equities. Now may be the ideal time to consider adding hard assets like gold. The yellow metal may potentially provide a meaningful hedge against falling stocks, deflationary pressures and a lower dollar.
Adding physical gold to your portfolio has never been easier than it is today. Speak with an Advantage Gold account executive today about the potential benefits of physical gold ownership. Our associates are here to answer any questions you may have, and can even show you how to buy and hold gold using your IRA account.
Don’t ignore the warning signals currently being seen. Explore your options for added diversification with gold today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, dollar index, GDP growth, gold, monetary policy, weak growth