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Gold Is Looking Bullish after a Week of Volatility

21 May

Gold Is Looking Bullish after a Week of Volatility

Gold Market Discussion

Volatility Rocks the Markets and Gold is Looking Bullish

Dollar Index, May 2017

After a turbulent week, gold is looking bullish, and investors are flocking back to precious metals. Volatility rocked the markets stemming from political controversy in Washington. This was the controversy surrounding the President’s dismissal of FBI director Comey and his meeting with Russian state officials. The controversy prompted a sharp sell-off on stocks, and the dollar index plummeted. As this chart indicates, the dollar lows could be around to stay.

However, it is not solely due to political fall out that investors are moving back to gold. Gold is looking bullish for several reasons. The weakening of the dollar index is playing a big role in boosting gold prices. Analysts – and even the President – have been saying for some time that the dollar is too strong. Its strength certainly weighed down gold prices last year, and it also makes U.S. exports less desirable. If we finally see some lasting weakness in the index, gold prices could have some support for some time.

What this means for investors: Gold prices have fallen back the past couple of weeks, but this week’s trading shows that the markets are easily spooked. It appears also that in this political climate, things will get stormier from here. On Wednesday, gold made its biggest gain since last summer trading over $1250. Prices still have room to push higher though. Investors are taking advantage now of relatively low prices to avoid scrambling for a safe haven when the need is more dire.

Stocks Stage Comeback, but Market Still Looks Sloppy

Stock Markets are sloppyStocks saw a major sell-off on Wednesday. In one trading day, the Nasdaq, S & P, and Dow all lost nearly all of their gains from this year. It was the biggest loss since September of last year.

The stock markets recovered some of their losses through Thursday and Friday, but the market is not as confident as it was. Analysts are worried about the Trump rally losing steam, as insider stock selling is outpacing buying.

What this means for investors: Despite the positive stock trading at the end of the week, gold didn’t reverse its direction. Gold continued to trade in the green, as uncertainty was by no means diminished. Furthermore, central banks could be a bigger threat to the stock market than the political landscape. The Fed is saying it is going to raise rates, and many analysts believe the economy is too mediocre to handle it.

Why Silver Might be the Right Buy 

silver moneySilver experienced a rally along with gold this week posting 3% gains for the week. The metal is moving along with gold on risk aversion against the unstable outlook in politics and the markets. Silver is still cheap right now, however. It is experiencing some resistance currently around the $17 mark.

What this means for investors: Ultimately, silver is going to follow gold, and we are seeing bullish signs from gold. Watch for price dips in silver and take advantage of cheap prices as it battles resistance for now. Silver had a stellar run last year outperforming gold much of the year.

Market-Impacting Events to Watch For

Trump signs Executive OrdersAmidst the swirling controversy around closed door conversations with the Russians, Comey’s firing, and the FBI investigation, President Trump embarked Friday for his first foreign trip as President. The first stop is Saudi Arabia, and the tour includes Israel, Vatican City, and Brussels. There could be important geopolitical impact from the tour that would impact markets, however tax reform is the Washington policy move that investors are paying more attention to. But with the political fallout the White House is wading through right now, some are starting to worry that we won’t see tax reform anytime soon.

The Federal Reserve seems on pace to hike rates in June, but one Fed president thinks it could be the wrong move. The economy is showing slowing signs, and a rate hike would be disruptive to growth. Soft retail sales are just one sign of a slowing economy.

What this means for investors: Washington policy, geopolitical tension, interest rates, central banks, and the dollar index are the things to watch in the coming weeks. In addition to these indicators, the markets seem to be especially wary of black swan events. The scare of 2008 still looms over investors who don’t want to lose out again from overplaying a hot stock market. Wealth security in assets like gold is becoming increasingly attractive.

 


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

Volatility Rocks the Markets, and Gold Is Looking Bullish

Read Here

Stocks Stage Comeback, but Market Still Looks Sloppy

Read Here

Why Silver Might Be the Right Buy

Read Here

Market Impacting Events to Watch For

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.

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