Gold Lacks Momentum And Here Is Why That's Okay - Bond King Jeffrey Gundlach
(Kitco News) - The yellow metal can’t find the needed momentum for a breakout in either direction, according to famed investor and “Bond King” Jeffrey Gundlach.
“The price of gold has been off the radar screen. It’s interesting how gold can't seem to get any momentum above $1,350, yet it doesn't drop. So that's been consolidating sideways,” Gundlach told CNBC on Wednesday.
Gold is not the only one stuck in this trend, Gundlach noted, pointing to the U.S. dollar and 10-year Treasury yield.
“All three of these markets … are consolidating sideways after big moves. So it will be interesting to see which way they break,” he said.
Gold prices slightly retreated on Thursday after almost reaching $1,350 during the previous trading session. The yellow metal was primarily pressured by a more robust risk appetite, which was clearly visible through rallying stock markets.
June Comex gold futures were last at $1,334.20, up 0.43% on the day. Spot gold on Kitco.com was at $1,330.40, up 0.32% on the day.
“Fears have somewhat eased regarding a potential U.S.-China trade war. Traders tend to initially factor in worst-case scenarios for expected events and then ratchet down those expectations,” said Kitco’s senior technical analyst Jim Wyckoff. “In the near term, look for more market volatility coming from this situation. Such should be a positive for the gold and silver markets.”
#Gold In 'Good Spot' For Second-Quarter Rally: BMO | https://t.co/eOjLVRTOyW pic.twitter.com/mquk0euxOa
— Kitco NEWS (@KitcoNewsNOW) April 5, 2018Gold analysts remain quite optimistic when it comes to projecting prices.
Bill Baruch, president of Blue Line Futures, suggested that a better look at the gold market can only be revealed from afar.
“You've really got to back away from the forest to really see these trees,” Baruch told CNBC. “I am a little surprised we didn’t take out $1,360. But this is a big level up there. Gold is consolidating very well.”
Baruch added that he is “extremely bullish on gold” because he is “bearish” when it comes to the U.S. dollar.
“The dollar is unwinding the entire 2014 rally. And there is more room to go down — another 7% potentially,” he said.
A big move in gold is coming, Baruch noted, projecting for the yellow metal to jump above $1,400 before August or September.
By Anna GolubovaFor Kitco News
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agolubova@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.