uploads///tower _

Is Gold’s Autumn Rally around the Corner?

By

Updated

Gold investors puzzled

Gold investors have been puzzled by the way gold prices (GLD) are falling amid ramped-up trade tensions and emerging market crises. The US dollar’s (UUP) strength and the rate hike outlook have been pressuring gold prices for most of 2018.

Lately, gold prices have been trading without much direction. Most investors are waiting for the Fed’s meeting on September 25 and 26 for the future rate outlook, as a September rate hike seems more certain.

Article continues below advertisement

Support during autumn months

If the Fed’s tone is dovish and it seems concerned about trade issues and the emerging market crisis, gold could gain. Investors should note that gold has a hard time competing with income-yielding assets. These assets are attractive when interest rates (TLT) are high because gold doesn’t generate any income.

After the major short-term overhang for gold in the form of the rate hike is over, investors can focus on the fundamental factors, which usually support gold prices during the autumn months. Historically, September has been a bad month for stocks (SPY) (DIA) but on an average, a good one for gold. The most dominant of these factors is the increased pace of physical gold buying, especially from India.

Factors driving gold prices

In this series, we’ll discuss the key factors impacting gold such as the US dollar, the interest rate outlook, current economic and geopolitical issues facing the world markets, and technical indicators. We’ll see how each of these factors bode for gold. In conclusion, we’ll see whether enough support is available for gold prices to rally as the seasonally stronger period for the precious metal arrives.

Advertisement

More From Market Realist