Gold pushes steadily higher on inflation concerns, renewed safe-haven interest
MunKNEE analyst forecasts strong precious metals showing in the weeks ahead

(USAGOLD – 7/20/2021) – Gold pushed steadily higher in early trading as bond yields continued their sharp descent and the dollar strengthened. It is up $11 at $1825. Silver is down 3¢ $25.21. Gold’s steady recovery from yesterday’s overnight selloff, combined with the steep drop in bond yields, offers a clear signal of renewed investor interest in safe-havens. The prospect of more inflation, according to a brief analysis posted at the MunKNEE website, is one of the key drivers in that push to safety, and, as a result, gold and silver prices are likely to get a healthy boost in the short run.

“…[I]nflation expectations tracked by the New York Fed,” writes Munknees’ Lorimer Wilson, “roughly match the inflation expectations tracked by the University of Michigan’s Survey of Consumers, whose latest reading jumped to 4.6% … With such high inflation expectations, in combination with the 30-day up cycle (July 12th to August 11th) for Silver, [chart analyst] Goldrunner’s fractal work suggests that Silver might start a run up to $34 per troy ounce and perhaps as high as $37/ozt. over the next 30 days. Gold has more overhead resistance but there is little resistance up to the $1,900 area on Gold’s chart so such high inflation expectations could very well see Gold bust up through that red downtrend line pretty easily to perhaps as high as $2,100/ozt.”

Chart of the Day

Personal Consumption Expenditure Price Index (PCE)

bar chart showing the personal consumption expenditures index favored by the Fed as inflation indicator

Sources: St. Louis Federal Reserve [FRED], U.S. Bureau of Economic Analysis

Chart note: Economists are generally surprised at the surge in the PCE index – the inflation measure preferred by Federal Reserve policymakers. The 4.3% gain for May is well above the Fed’s 2% target and the 3.98% gain reported for April. It is the highest monthly print on record (since 1960).

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