Gold Has Explosive Potential - Gundlach
(Kitco News) - Famed hedge fund manager and “bond king of Wall Street” Jeffrey Gundlach continues to be bullish on gold, reiterating his call that when the market breaks above through critical resistance at $1,360 an ounce, gold will push $1,000 higher.
According to recent Reuers article, Gundlach presented his bullish case for gold Tuesday at an event for DoubleLine clients. He also said that he is bearish on U.S. Treasury bonds.
U.S. government bonds “are not attractive,” he said.
Looking at classical technical gold charts, Gundlach said that “something big is happening.” He added that the market has “explosive potential energy” as it continues to build a strong base.
“Gold is maintaining an upward pattern above its rising 200-day moving average, which is extremely good,” he said. “I’m not predicting it....I’m letting the market prove itself.”
Gundlach’s comments on gold come as the market tests the bottom end of its near-term range as prices trade near a one-month low. June gold futures last traded at $1,323.10 an ounce.
While Gundlach’s is bullish on gold, he is just as bearish on U.S. Treasuries. He said that 10-year bond yields can continue to move higher. His comments came a day before the yields briefly pushed past 3% for the first time since 2014.
Positive for gold investors, higher bond yields might not have a major impact on gold prices as some analysts might expect. During his presentation, Gundlach said that rising inflation pressures will put pressure on government bonds.
Gold as a non-yielding asset does well in an environment where real interest rates are negative, which happens when inflation rises above bond yields.
Gundlach’s comments on gold and U.S. bonds came a day after his presentation at the Sohn Investment Conference, where he recommended buying the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP) and shorting Facebook.
He said at the Sohn conference that he is bullish on commodities as inflation rises. He noted that inflation traditionally rises into a recession.