Gold turns south to start the week as virus numbers surge globally
Lundin sees more volatility ahead for precious metals
(USAGOLD – 7/19/2021) – Gold turned south to begin the week as markets in general posted a strong negative reaction to the resurgent coronavirus numbers globally and worried about their effect on the young and still fragile global recovery. It is down $14 at $1800. Silver is down 43¢ at $25.30. Bond yields, commodities, and global stock indices also declined sharply while the dollar firmed. Like an unexpected storm, volatility is suddenly disrupting what until now has been a typically quiet summer in financial markets.
“Gold, and in truth all the markets,” says Gold Newsletter‘s Brien Lundin in an e-mail update sent out on Friday, “will have to navigate the Fed’s messaging on tapering and rate hikes over the coming months as inflationary pressures prove to be more tenacious than previously predicted. Fed officials, along with Treasury Secretary Janet Yellen and, reportedly, White House economic advisers, are now positioning ‘transitory’ inflation as more along the lines of six months instead of three, and more likely a year or so. I fully expect the message massaging to continue — and create volatility for gold and silver along the way. That said, if we are returning to a more-typical seasonality pattern, then the summer bottom for gold should be occurring right about…now. It would fit my experience of gold putting its summertime lows in the range of mid-July to mid-August, so let’s hope that’s the case this time around.”
Chart of the Day
Gold, silver, Goldman Sachs Commodities Index
Chart courtesy of TradingView.com
Chart note: Over the past 12 months, gold and silver – both falling within the commodities realm – have underperformed the commodities indices. Other commodities have outperformed the indices – and some by a wide margin. Gold and silver led commodities higher over the last few years, fell back, and some believe are now building momentum to lead again.