The gold market is trading slightly higher to kick off the new trading week. This week will likely see lighter trading volumes due to the Thanksgiving holiday, with many investors taking off Friday as well.
The gold market appears to be in consolidation mode and could be getting ready for a significant upside breakout. The market has passed an important test in recent sessions, as the recent dip down to the $1200 level found willing buyers.
The catalyst for the next major move higher could be a number of issues. The global economy, the dollar, geopolitics and stocks could all play a role in the next major move. In fact, a combination of these factors could change current global market dynamics and fuel a major asset rotation away from equities. Such a rotation may already be under way.
A particular area of interest may be the Fed and how it handles a slowing global economy. The central bank has thus far maintained its forecast for further rate hikes. Amid growing criticism, the central bank is set to hike rates again next month and has another three hikes penciled in for next year. Whether or not the central bank follows through on further hikes remains a topic of debate. President Trump has made his opinions of rate hikes well-known, and Bridgewater Associates founder Ray Dalio recently suggested that the Fed has hikes rates to the point of hurting asset prices.
Although the Fed is trying to maintain its independence, it may at some point have to reconsider its plans. One need only look at copper prices, crude oil prices and some of the data coming out of China to clearly see that the economic road ahead may be bumpy. These markets are sending a message, the question is will it be received.
If the economic picture begins to deteriorate further, the Fed may have no choice but to take a more dovish approach. This could include putting a halt to the current tightening cycle or even backtracking by cutting rates again to simulate growth. An increasingly dovish Fed could potentially fuel a major reversal in the dollar, which has acted as a key point of resistance to for higher gold prices.
A combination of a weaker dollar, declining equities and increasing risk of recession could potentially send investors scrambling. For many investors, however, it will be too late. Stocks have a way of taking the stairs up and the elevator down. The next major downturn could potentially send stocks lower by 30, 40, even 50% or more in a short period of time. That is why now may be the ideal time to act.
Gold stands to benefit significantly from increasing risk aversion and the threat of global recession. The market is already showing significant signs of underlying strength, and could embark on a protracted bull market any day now.
Adding this key asset class to your portfolio has never been easier. 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 easy it is to build a significant allocation using your IRA account.
Don’t wait for the next major stock market collapse or for the next recession to take hold before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, brdgewater, central bank, china, consolidation, gold, ray dalio, trading volumes