Gold trades quietly in follow-up to yesterday’s strong advance
Rebound seems imminent for both fundamental and technical reasons, says analyst

(USAGOLD – 10/1/2021) – Gold is trading quietly this morning in the follow-up to yesterday’s strong advance. It is down $3 at $1756. Silver is up 21¢ at $22.46. September was not particularly kind to either precious metal against a backdrop of indecision at the Fed, a downside reversal in the bond market, and a stronger dollar despite growing skepticism about keeping the lid on inflation. After all was said and done, gold finished the month down 3.1%. Silver was down 7.7%. Stocks did not escape a woeful September – falling 4.5%.

In the latest issue of Gold Newsletter, analyst Brien Lundin offered a short overview of the technical factors at play in the gold and silver markets and came away with a cautiously positive outlook. “For its part,” he writes, “silver never delivered the buy signal that gold did, but seemed about to. It remains in that state, still with a sell signal, but in the area where we would expect a rebound. That’s because, when monetary issues are driving the metals and supportive of higher prices, gold and silver have tended to hit these bottoms in the 14-week stochastic and quickly reverse higher. So a rebound seems not only inevitable for fundamental reasons, but perhaps imminent on the technical evidence. In fact, as we’re putting this issue to bed, gold has bounced as much as $40. Most of that gain came after Powell, in testimony before the House, noted that the U.S. economy is ‘far away from full employment.’ Let’s grant that he’s also angling for re-appointment, but also recognize that gold is at extremely oversold levels and therefore primed for some sort of rally.”

Chart of the Day

overlay line chart showing gold and negative yielding debt aggregate 2014 to present
Chart courtesy of Merk Investments

Chart note: With inflation on the rise, the percentage of debt that carries a negative yield is likely to grow unless, of course, central banks move aggressively to push yields above the inflation rate. The number of analysts envisioning such a policy change, though, are few and far between at this juncture.

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