Gold is on a bullish trajectory and these 5 boosters could launch the metal even higher.
Gold is on a bullish trajectory as the metal continues to trade around six-year highs and seeks to establish itself above the $1,425 resistance level. Domestic investors are shifting their focus back to Federal Reserve policies and U.S. growth and now, according to various analysts, there are plenty of boosters to launch gold even higher reports an article on Newsmax.
One of these “boosters” has been President Trump’s choice to place Christopher Waller and Judy Shelton in key positions at the central bank. Waller, who was already occupying a lower position at the Fed, has long been calling for more dovish policies as the Powell-led office persisted with their hawkish rhetoric for years. Shelton, on the other hand, is a known gold bug who recently voiced her view that monetary stimulus in the U.S. would be a good thing.
According to Newsmax, Trump’s move strengthened the perception that the shift in Fed policy is abrupt. As Georgette Boele, ABN Amro’s coordinator of FX and precious metals strategy noted, the markets are now over-pricing rate cuts, showcasing the change in sentiment and an expectance of prolonged dovishness from the Fed. Vanguard Markets’ Stephen Innes concurs, noting that Trump’s goal seems to be a highly dovish Fed board that is willing to cut rates frequently.
Besides the prospect of loose monetary policies, Newsmax writes that gold also received support from a slew of disappointing economic reports, which included weaker-than-expected U.S. payrolls and manufacturing data. Likewise, geopolitical and trade tensions have far from eased, as disagreements over imports from both China and Mexico continue to escalate. Most recently, President Trump amped up tariffs on a variety of goods coming in from Europe.
The metal has also benefited from weak manufacturing reports from both Asia and Europe, which added more weight to the notion that we are in the midst of a global growth slowdown. Given their presence on the global market, China’s rapidly-weakening economy is another important point to watch out for as the U.S.-China trade disputes unravel. In regards to Europe, George Gero, a managing director at RBC Wealth Management, noted that European central banks, as well as the ECB itself, all seem to be following the Fed’s lead and are turning dovish themselves. All of this amplifies the already-strong safe-haven allure for gold, added Gero.
Newsmax states the recent sinking of Treasury yields to their lowest level since November 2016 has also helped turn attention to the precious metals market, as silver, platinum and palladium have all seen gains in recent days. Howie Lee, an economist at Oversea-Chinese Banking Corp, noted that the era of loose monetary policies around the globe appears to be returning, which should serve as a consistent source of investment demand for gold.