11 Sep

Why the Bottom for Gold Could Be Close

WRITTEN BY Anuradha Garg

Gold’s weakness could reverse

The SPDR Gold Trust ETF (GLD) has fallen ~8.4% year-to-date and ~11.5% from its April peak. The sentiment for gold is quite bearish right now. However, as we’ve noted in this series, this scenario could be about to change.

September is usually a stronger month for gold after the summer doldrums. In this September, however, investors could remain in a wait-and-see mode until the Federal Reserve’s September 25–26 meeting is over. The Fed is widely expected to raise rates by 25 basis points. After that, gold prices could rally as the near-term catalyst for weakness is over.

Moreover, the Fed might also sound more dovish as it has done on previous occasions such as the August meeting minutes and the recent symposium. This could go a long way in restoring gold’s investment appeal.

Why the Bottom for Gold Could Be Close

A seasonally strong period ahead

Historically, gold prices have declined in the summer months, only to climb in August onward due to the seasonal pattern of demand for gold. Physical gold demand from Asian countries such as India (INDA) supports its price after that. Indian wedding season and post-harvest period should support gold prices. As we’ve already highlighted, Indian gold imports more than doubled in August.

Factors that could reverse gold’s slide

The US dollar (USDU) has been gaining as a safe-haven asset as trade concerns heighten. However, a further escalation in the tariff dispute and back-and-forth tariffs from China could mean a negative impact on the real activity in the United States (SPY) (VOO), which could eventually affect the dollar.

Markets seem to have priced in the policy divergence theme and the rate hike (TLT) trajectory by the Fed. This could mean a limited upside for the dollar (UUP) and even weakness going forward, which could benefit gold.

The current technical indicators also indicate an extremely oversold position for gold. At the extremes, these usually indicate a change in direction.

Latest articles

Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.

The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.

Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.

Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.

14 Jun

IEA Again Slashes Its Oil Demand Growth Estimate

WRITTEN BY Rabindra Samanta

As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.

Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.