A sharp selloff in gold and other precious metals yesterday seemed to be a result of an uptick in rates and a bounce in the U.S. Dollar. We continue to hear so much chatter about inflation; that’s the biggest factor driving gold recently and it’ll continue to be the driving force behind future rallies.
Of course, inflation will lead to higher rates and higher rates will eventually lead to Dollar strength, but don’t think for a minute that the Biden Administration is going to take their foot off the pedal— it’s not going to happen! The Dollar is going to have a bounce here and there, and gold will have a dip here and there. I recommend buying those dips.
Gold came down and kissed the 200 DMA this morning at $1,855.90. Now we need to see gold prices north of $1,900 again. The 50 DMA is still way down at $1,805 but is quickly climbing towards the 200 DMA. When that 50 DMA crosses above the 200 DMA, you better be long; the “Golden Cross” is one of the best technical signals for gold.
I think gold is still on the right track to see a continuation of this rally. Gold’s in a bull market and inflation is heating up in ways that will impact everyday people's needs: food, energy, and housing. Once those wages start to move higher, and they must in order to compete with unemployment benefits, you’ll see inflation really begin to heat up. Gold is still a good value in the longer term.
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