Gold has been trending higher since a daily double bottom at $1675 was reached at the end of March, trading in the upper range of a 9-month bullish descending channel.
On Thursday, the gold market began to factor in more and more clues surfacing to suggest inflation will rise beyond what central banks expect to see, and that Federal Reserve policymakers seem unlikely to budge on their accommodative stance any time soon.
Although dovish Fed-speak failed to provide a catalyst to break through this key overhead resistance line last week, gold zoomed quickly toward $1800 on Monday after the April U.S.
During Berkshire Hathaway’s annual shareholder meeting on Saturday, Buffett said that his company is seeing rising price pressures among its various businesses and investment.
Market analysts pointed to the statement on interest rates by Yellen, a former head of the Federal Reserve, as the main factor influencing the day’s sell-off in equities as well.
However, these comments were walked back by Yellen later in the day when she spoke at the Wall Street Journal’s CEO Council summit.
Additionally, we had several Fed officials reassure the markets on Wednesday that the U.S.
Asked about when the Fed should start talking about reducing its bond-buying program, Fed Vice Chair Richard Clarida told CNBC, “We don’t think so right now.” With the true U.S.
We also saw on Wednesday 79-year-old billionaire Sam Zell echo Warren Buffet’s comments regarding inflation, while announcing he has been pushed into buying gold.
“We are seeing it in all of our businesses.
With the inflation genie clearly being released from its bottle, Tim Hayes, chief global investment strategist at Ned Davis Research told Kitco news this week, “The Federal Reserve has said it wants inflation to run above their target, and the risk is that as they let inflation run, they will end up behind the curve.
Here is something to consider regarding rising inflation sinking real rates lower in the very near future, as increasingly negative real interest rates have historically been the strongest driver of higher gold prices.
When the April CPI number comes out on May 12th, the index should be over 3% making the real yield on the 10-year T-Bond possibly minus 2%.
Meanwhile, the miners had previously broken out of their respective technical downtrend by mid-April, when the GDX made a weekly close above $36.
Barrick Gold Corp reported a 78% jump in first-quarter profit on Wednesday, beating analyst expectations, and said it was on track to meet annual forecasts.
The recent general improvement in the sector’s financial health should also lead to more M&A activity in the precious metals sector.