Equities Near Record Highs To Weigh On Gold For Now – Murenbeeld & Co
Gold prices are suffering as investors pile into equity markets amid easing recession fears, but one firm still sees potential for the precious metal as financial markets are still threatened by slow economic growth.
In a recent interview with Kitco News, Chantelle Schieven, head of research at Murenbeeld & Co said that her firm remains optimistic that the gold market can regain its luster by the end of the year. In its latest quarterly update, the research firm continues to see gold prices pushing towards $1,400 by the end of the year through the first half of next year.
The comments come as gold prices have struggled to push through the critical psychological level at $1,300. June gold futures last traded at $1,291.10 an ounce, down 0.32% on the day. The yellow metal struggles under the weight of equity markets; S&P nearly 1% from its record highs.
After starting the year with a positive correlation, the relationship between equities and gold have turned negative in the past month, which could drag gold prices down further in the near-term.
Schieven said although the risks of a recession remain low, the firm sees higher gold prices as the U.S. economy slows, eventually weighing down the U.S. dollar and equity markets. She added that geopolitical uncertainty will also continue to keep a bid under the yellow metal.
One area of ongoing political turmoil is the growing conflict between President Trump and the Federal Reserve. Monday, the president was on Twitter to once again voice his displeasure with U.S. monetary policy.
If the Fed had done its job properly, which it has not, the Stock Market would have been up 5000 to 10,000 additional points, and GDP would have been well over 4% instead of 3%...with almost no inflation. Quantitative tightening was a killer, should have done the exact opposite!— Donald J. Trump (@realDonaldTrump) April 14, 2019
“Trump’s comments only add to the geopolitical uncertainty that favors gold,” said Schieven.
The firm also sees growing debt as an increasing concern for investors and a possible catalyst to ignite another rally in gold.
“Rising debt erodes economic growth, limits monetary policy options, is a restraining hand on expansionary fiscal policies and makes the financial environment more fragile and prone to crises,” the analysts said.