Gold is finally experiencing the breakout that bulls have been waiting for

Share This Article
June 25, 2019 2:48pm NYSE:GLD

Gold

From Maggie Fitzgerald:

KEY POINTS

  • Investors are piling into gold, sending the precious metal to a six-year high this week, and analysts think the commodity has established a “base” to go even higher.
  • The precious metal is up more than 8% this month, on pace for its best monthly performance since 2016.
  • Credit Suisse and Morgan Stanley are among the Wall Street firms that see a big second half of the year for gold.

Investors are piling into gold, sending the precious metal to a six-year high on Tuesday, and analysts think the commodity has established a “base” to go even higher.

Gold futures hit a high of $1,442.9 on Tuesday, its highest level since May 2013 when it reached $1,444.9. The precious metal is up 9.6% this month, on pace for its best monthly performance since February 2016 when gold gained 10.57%.

“Bigger picture though, given the magnitude of the base, which has taken six years to form, we suspect we could even see a retest of the $1,921 record high,” David Sneddon, global head of technical analysis at Credit Suisse, said in a note to clients Monday.

Sneddon said gold has established a multiyear base that could provide the platform for a “significant and long-lasting rally” for the precious metal.

Gold is breaking out after Federal Reserve Chairman Jerome Powell said last week it would “act as appropriate” to keep the current economic expansion going. Powell’s dovish comments increased the odds of the Fed cutting rates in July.

The Fed’s easier policy has also weakened the dollar. Again a basket of currencies, the dollar hit its lowest level since March on Monday.

“We have finally seen more conclusive signs of the USD starting to materially weaken,” said Sneddon. “With the DXY removing pivotal support from its 200-day average to complete an important bearish ‘wedge’ reversal, which should provide a fresh and significant catalyst for Gold to extend its gains.”

Gold prices also reacted positively after President Donald Trump signed new sanctions on Iran on Monday, days  after Iran shot down a U.S. drone, increasing geopolitical uncertainty.

Gold is up 10.6% for the quarter and is on track for its biggest quarterly gain since the first-quarter of 2016, when it rose 16.54%.

Morgan Stanley’s commodity strategist Susan Bates said gold is the firm’s No. 1 commodity pick.

“Morgan Stanley’s forecasts of falling real rates and a bearish US dollar outlook, against an uncertain macroeconomic outlook, should lend significant upside to gold’s price through 2H19 and into 1H20,” Bates said in a note Monday.

Gold futures are currently trading up 0.7% at $1428.6 and spot gold is trading up 0.44% at $1425.4.

The metal is seen as a safe haven and store of value during times of a weakening dollar, slowing economic activity and increased geopolitical tensions.

–CNBC’s Michael Bloom contributed to this report.


The SPDR Gold Shares (GLD) was trading at $134.31 per share on Tuesday afternoon, up $0.37 (+0.28%). Year-to-date, GLD has gained 8.62%, versus a 9.82% rise in the benchmark S&P 500 index during the same period.

GLD currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #1 of 34 ETFs in the Precious Metals ETFs category.


This article is brought to you courtesy of CNBC.



9 "Must Own" Growth Stocks For 2019

Read Next



Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular



Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories