Hope for the precious metal bulls

The level at the end of March may have marked the bottom of the correction. The eyes are on the area around 1990 dollars. A few thoughts on what's happening in the financial markets right now.


While the Fed is trying to fight inflation, it seems to be losing sight of the U.S. economy in the process. Yields on U.S. Treasury bonds are rising virtually every day, and by the weekend, ten-year yields were already trading at 2.75 percent. This is not good news for the USA, as financing is becoming increasingly expensive. The 30-year bond bull market is beginning to falter. Not really good news. At the same time, the Atlanta Fed's GDP Now Index signals only meager growth in gross domestic product of 1.1 percent in the first quarter. Stagflationary tendencies can no longer be dismissed out of hand.


Focus lies on the 2000 dollar mark

It is no coincidence that gold has risen with the U.S. dollar and U.S. government bond yields in recent weeks. Investors are diversifying their portfolios more and more towards precious metals. The swing-low that the gold price marked on March 29 just below the $1890 level may now actually turn out to be the bottom of the correction in the gold price. Most recently, the bulls were able to recapture and defend the area around 1965 dollars. Now, from a technical point of view, the resistance at 2000 dollars slides into the view of the investors. Although the first attack of the bulls could be fended off on Monday with high volume on the futures market. But the gold price remains further in striking distance to this important last resistance before a renewed towards the high of March 8 with 2069.


This 2000 dollar mark is ultimately of decisive importance. Twice already it could be overcome: once in August 2020, then again a few weeks ago in March. Both times, selling pressure arose immediately and the 2000 dollars had to be given up within a few trading days. If the bulls manage to sustainably overcome the 2000 dollar mark, this would be a strong sign. Not only for the next few weeks, but probably also for the coming months and years.


The gold price looks technically good. This technically good condition is supported by the fundamental environment. Inflation is high, and the U.S. economy is likely to slip into recession by the end of 2023. Good opportunities to hedge on this are:


Gold: $GOLD$JNUG$GOLD.BARRICK (Barrick Gold)

Silver: $SILVER$PSLV


Have a good week!


BR


Disclaimer: I am invested in Silver, PSLV and Barrick Gold. The above is my analysis and opinion, not investment advice.

 
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