The Daily Market Report: Gold Appears Poised for Second Consecutive Weekly Gain

27-Mar (USAGOLD) — Gold turned mildly corrective Friday, drive by profit taking after notching seven consecutive winning days. Despite the pullback, the yellow metal appears poised for a second consecutive higher weekly close. After dipping to an intraday low of $1192.00, gold is once again probing above $1200.

The main driver for gold recently has been the realization that the era of über-accommodative monetary policy is not coming to an end any time soon. With the BoJ and ECB in full easing mode with QE, the Fed which had been hinting at a rate hike this year, has now taken on a much more dovish tone. That has pushed rate hike expectations from March, to June to September…and more out now thinking lift-off wont happen this year at all.

Rising geopolitical tensions in the middle east are also helping to underpin gold. The Saudi coalition bombing intensified today amid concerns that the conflict is devolving into a proxy war between Saudi Arabia and Iran. This will likely perpetuate the already seething hatred between Sunnis and Shiites, potentially leading to an even broader conflict in the region.

The retreat in the dollar and recent stock market volatility have been supportive to gold as well. The dollar decline was triggered by the Fed’s dovishness. Stocks have generally risen on easier policy expectations, but this time equity investors seem to be giving greater credence to diminished growth prospects. As investors move out of shares, they frequently reallocate to safe-havens like gold.