The gold market has continued to see selling pressure as a combination of bearish factors take a toll on market sentiment. While the recent slide in gold prices may be viewed as “bearish” or a negative by short-term traders, smart long-term investors will likely welcome lower prices.
The notion of rising interest rates, a strong appetite for risk and a stronger dollar have all affected gold and hard assets. Sentiment is currently very poor, and the market’s technical posture is also lacking. Key moving averages are now pointing lower, which may keep short-term traders selling into any rallies until proven otherwise.
The idea of further rate hikes has had a major effect on the dollar. The greenback is trading near 12 month highs currently, and more upside could be in store. The currency may also be benefiting from rising tensions over global trade, and the negative correlation between gold and the dollar has been apparent. As long as the dollar remains on the strong side, the yellow metal may have a challenging time forging a sustainable rally.
There are also likely other supply/demand factors at play currently that have also weighed on the market. Asian buying has dried up quite a bit in recent months, and may not see a significant uptick until summer starts drawing to a close or if prices fall further.
With so much negativity surrounding the market currently, it is not surprising that prices have been moving lower. They may, in fact, continue to do so until any one of a number of potential catalysts fuels a major reversal. It is not a question of “if,” but rather “when.”
It is important to keep gold’s recent weakness in perspective. While dollar strength has kept a lid on prices, does anyone really think the dollar will stay strong? Regarding interest rates, does anyone think rates are going significantly higher? The answer to both of these questions is probably not. In fact, the dollar could roll over once again, and continue to lose value as fiat currencies have shown a tendency to do. While the Fed may keep raising rates, the central bank will likely have to start lowering them again once the next recession takes hold. Both scenarios are potentially highly bullish for gold prices, and could coincide with a significant multi-year rally in prices.
This makes now-while prices are weak-the ideal time to buy for the patient, long-term investor. It is likely only a matter of time before gold turns the corner and starts moving higher. The question is: Would you rather buy at prices that could be considered a steep discount or wait for prices to move higher?
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to build a significant allocation in this key asset class using your IRA account.
Don’t wait for the next major market collapse or for gold prices to start moving higher. Take advantage of lower prices today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, currency, global trade, rising interest rates, strong dollar, supply and demand, trade war