Spring Is Here And Gold Will Feel The Warmth - Analyst
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(Kitco News) - Gold investors will not be disappointed this spring season, as the metal’s set-up looks very promising, according to one long-standing gold bull.
The two biggest supporting drivers this spring will be a dovish Federal Reserve and overbought equities, Metal Bulletin precious metals analyst Boris Mikanikrezai wrote in a Seeking Alpha post on Wednesday.
“Expect a warm macro backdrop for gold in Spring 2019 on 1) dovish Fed’s stance and 2) unsustainable rally in U.S. equities,” Mikanikrezai said.
The Fed announced this week that it is not planning to raise rates at all this year due to slower economic growth and a number of geopolitical uncertainties, including Brexit and U.S.-China trade talks.
The central bank’s dovish stand is likely to “pressure the dollar lower and therefore stimulate speculative demand for gold,” explained Mikanikrezai.
In the meantime, U.S. equities might have a bit more room to run higher, but their rally is unsustainable, the analyst noted, pointing to April as the month when equities could tumble down.
“A renewed selloff in equities will induce macro investors to hide in gold, resulting in a surge in ETF inflows,” Mikanikrezai said. “Against this, I expect the macro backdrop to be conducive to stronger monetary demand for gold and thus stronger gold spot prices.”
Overall, gold has been rebounding well in March, trading comfortably above the $1,300 level following the Fed’s dovish announcement. April Comex gold futures were last at $1,307.10, down 0.02% on the day.
“Gold has rebounded since March 5 despite a mixed macro backdrop,” Mikanikrezai stated. “Gold’s spec positioning lightens for a third week in a row. [And] ETF investors [bought] gold for the first time in six weeks.”