Gold's Path Is Down, Not Up - DeCarley Trading
(Kitco News) - Gold has missed several opportunities to rally this year andthe path of least resistance is in the downward direction for now, thisaccording to Carley Garner, president of DeCarley Trading.
“[Gold] has had every excuse in the book to rally. We’ve hadpolitical turmoil, trade conflict, and gold just can’t seem to get above$1,350, $1,360 [an ounce]. So, I think we’ve missed the boat on the rally,”Garner told Kitco News.
The yellow metal has traded range-bound since early 2018,testing lows of $1,320 an ounce but failing to break past and stay above $1,360an ounce, which some analysts consider a key resistance level.
Several key macro events did provide short-term tailwindsfor gold in the last month. The latest round of rate hikes from the U.S.Federal Reserve in March sent gold higher. Fears of a trade war between U.S.and China further fueled the rally in early April, causing gold to climb to a3-month high of $1,353.2 an ounce.
However, gold has since slid 2% since April highs on theback of a strengthening U.S. dollar and fast pace of rising yields. The U.S.10-year treasury rose above 3% on Tuesday for the first time since January2014.
Garner noted that the dollar’s strength is likely to persistthroughout the year due to rising interest rates, adding further resistance gogold.
She added that gold’s lukewarm performance in the face offalling stocks is reminiscent of February when equities markets sold-offsharply but gold failed to materially rally.
“If you remember back in February of this year, it’s kind ofthe same story. The S&P was completely collapsing, and gold was creepinghigher, but there wasn’t a big substantial move like you would expect in gold,”Garner said. “I just think if they can’t do it now, when are they going to beable to do it? I’d rather be bearish on rallies in this market for the timebeing.”
Garner said that gold’s tight range is not due money flowinginto bitcoin, as some analysts have speculated.
“When I look at the futures volume in bitcoin, it’s reallylow. We’re not talking a really big market here, it’s actually very thinlytraded, so I don’t think that’s a big story there,” she said.
By David LinFor Kitco News
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