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Is Gold’s Longest Monthly Losing Streak Nearing an End?

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Gold’s longest monthly losing streak

Gold prices dropped for the sixth straight month in September, which is gold’s longest monthly losing streak since January 1997. Year-to-date, gold prices are down by 9%, and they are down 12% from their April peak.

Gold’s price decline is especially puzzling given the presence of many factors that would have usually supported its safe-haven appeal and thus its price. Trade tensions are continuing to ramp up along with the brewing crisis in emerging market (EEM) currencies. Two major factors impacting gold (GDX) negatively in 2018 have been the US dollar’s (UUP) strength and the rate hike outlook.

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Bearish gold sentiment

The investor sentiment for gold is quite bearish right now. Speculators have an extremely short position on gold, signifying an oversold condition. The outflows from the SPDR Gold Shares (GLD) continue unabated. The conditions for gold have become so bad that the bottom for gold could be close.

Factors driving gold prices

In this series, we’ll discuss the key factors impacting gold such as the US dollar, the interest rate (TLT) outlook, current economic and geopolitical issues facing the US (SPY) (VOO) and 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.

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