Gold continues to drift sideways despite a range of concerns
Bloomberg’s McGlone thinks that might be about to change

(USAGOLD – 10/7/2021) – Gold continued to drift sideways midway in the trading range in place since early August. It is up $1 at $1765. Silver is up 14¢ at $22.83. The precious metals’ rangebound pricing has been something of a mystery to analysts given the concerns about surging inflation, a 1970s-style energy crisis in Europe, a credit crisis brewing in China, and a wobbly bond market (and that’s just the short list). Bloomberg’s head commodity strategist, Mike McGlone, thinks all of that might be about to change.

Overlay line chart showing gold and oil one year
Chart of the Day courtesy of TradingEconomics.com

“West Texas Intermediate,” he says in an update posted at Bloomberg Intelligence, “is the featured top major commodity performer in 2021 on our scorecard and gold the worst (Please see our Chart of the Day), which makes sense in a bounceback from the 2020 swoon, but we see risks of a reversal into year end. Gold has the advantage of low elasticity of supply vs. crude oil, which is facing price pressure from both sides of the demand-vs.-supply balance. There’s a reason WTI is about half the price of its peak from 13 years ago: Humans are incrementally using less crude and replacing it with technology. It’s only been about a year since gold’s last peak, and we believe it should be a relatively short matter of time to revisit. Gold has outperformed most major commodities in the past 20 years.”

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