Will Gold Hold Up Under Pressure? Veteran Trader Points To A Comeback
Editor's Note: If you would like to catch all of Daniela’s interviews from Mines & Money, you can do so here. You can also access the three exclusive gold-panels hosted by Kitco News at the event.
As gold prices continue to face the heavy pressure of a risk-on environment, one veteran trader is not worried about the yellow metal’s future demand.
“I’m not really concerned about gold right now,” founder of bubbatrading.com Todd ‘Bubba’ Horwitz told Kitco News on the sidelines of the Mines & Money conference in New York.
Gold prices have hit an eight-week low on Tuesday, with spot gold on Kitco.com now trading at around $1,221.50 an ounce.
Horwitz said he sees the dip in prices as another buying opportunity before the U.S. dollar loses strength and gold rebounds.
“Gold has been down for the last few weeks, but look at where it is compared to where it came from. We were thinking it was going to go down below $1,100 and we recently just threatened $1,300. You are probably looking at another buying opportunity right now. We are going to have a weaker dollar. No matter what the Federal Reserve does, the dollar is going to come lower,” he said.
After the French election on Sunday, risks have subsided, calming markets as well as safe-haven demand. With increased risk-on sentiment, investors are now flocking to big tech stocks, Horwitz pointed out.
“It reminds me of 1999 all over again. It is a blow off to the upside. You are going to see there is still a bid for gold underneath the market. Gold will continue to try to work higher. There are a lot of things going on, but equity traders are not worried about gold,” he explained.
Despite these pressures, gold is still holding above major support at $1,200.
“Gold is holding up well. The physical buying may be there through the back door. I know there is a lot of physical buying in China and India. But, I don’t think there is enough gold to handle that paper gold that is out there. So all these ETFs [exchange-traded funds] that people are buying, hoping that it is their share of gold — I think they will be disappointed someday,” noted Horwitz.
“Markets are extremely overvalued and when those markets do correct, people will be looking for alternative investments, one of them being gold. Gold is probably something that everybody doesn’t own, but should.”
Horwitz shared a similar positive outlook on silver, stating that he buys the precious metal every time he gets the chance.
“Every time I have money - my first purchase is always silver. I like to buy physical silver, even though it is hurting me right now as prices are declining,” he said.
Spot silver on Kitco.com was trading flat during the opening hours of the Asian session on Wednesday, lingering at $16.16 at the time of publication.