3 Things That Will Fuel Gold Rally Are Here

02 Apr
gold bar on grains

3 Things That Will Fuel Gold Rally Are Here

Gold Market Discussion

3 Things That Will Fuel Gold Rally

There are 3 things that will fuel gold rally that are abundantly transparent in the markets already. This week, gold continued its upward climb touching above $1,250.  Take a look at what’s driving this rally.


1. Inflation

Some analysts are predicting gold to soar to $1,500 soon as inflation continues to creep up.Lately the dollar has been over strengthened as many analysts and decision makers – including President Trump – have stated. Some of this strength is slipping and as it corrects, gold is reaping the benefits.

2. Market Uncertainty

Along with inflation, market uncertainty is undermining the Trump rally we saw in the stock market and dollar after Donald Trump was elected President. These uncertainty factors are due as much to geopolitical factors as to monetary and fiscal decisions. Potential developments in the French elections, trade relations with China, and unpredictable black swan events could lift metals. Keep an eye on developments with the U.S. debt ceiling as well as President Trump’s proposed spending increases become more likely even as the ceiling hits its limit.

3. The Euro

Europe is gearing up for significant volatility thanks to Britain (see more about that below). This week the euro was  at a five week low due to Brexit news and dove-ish tones coming out of the European Central Bank. Safe haven demand is going up. But data is also showing that inflation is picking up in the European markets as well, which is a further boost for gold.

What this means for investors: For more on how inflation and the euro could drive the gold rally to $1,500, see the below video. Alan Knuckman also predicts stronger technicals for silver to rally.


Brexit Makes a Case for Gold. Here’s Why


On Wednesday last week, Prime Minister Theresa May performed the formal and official motion for the U.K. to leave the European Union. May signed Article 50 of the Lisbon Treaty, which gives provision to member nations to leave, and the official letter was delivered to the EU heads in Brussels.

The EU response from European Council President Donald Tusk was, “We already miss you. Thank you and good bye.” Later Tusk stated that the EU would not attempt to punish Britain in the negotiations, since Brexit was “punishment enough.” The EU also was emphatic that exit terms will come before trade deal terms in negotiations.

Great Britain was rocked by further volatility on Friday when First Minister Nicola Sturgeon formally requested May to allow for a second Scottish referendum on independence from Britain. Scotland voted against Brexit due primarily to a desire to remain in the EU.

What this means for investors: The British pound is probably going to get hit hard for a while. After the referendum in June last year, it fell to 30 year lows. Furthermore, Brexit could mean the departure of many financial firms and multinationals headquarters from London to the continent. Gold will be a safer alternative to the week pound and reprise its role as a hedge against currency inflation. As currencies weaken, gold, which is both a commodity and currency alternative, becomes a better store of value (as illustrated by charts here).

Remember When We Called the Bottom for Gold Prices? We Aren’t the Only Ones

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In January I called the bottom for gold prices. At the time, gold was trading at around $1,151. In only a couple months, it is now flirting with a break out point over $1,250. The metal is up about 8% for the year now, and has been extending rallies for a couple weeks now.

Other analysts are calling the lows of last December as a bottom as well and seeing conditions as only favorable for gold and silver prices to go up.

What this means for investors: Gold sank towards the end of 2016 during the height of the Trump rally in the stock market and after a Federal Reserve interest rate hike. Charts and figures are suggesting this year’s upswing could continue though. We are seeing similar rallies in silver as well as it catches the tail winds of gold.

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 Here are some articles from the web discussing the topics in this week’s post:

3 Things That Will Fuel Gold Rally

Read Here


And Here

Brexit Makes a Case for Gold. Here’s Why.

Read Here

Remember When We Called the Bottom for Gold Prices? We Aren’t the Only Ones

Read Here


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”