Expect gold prices to climb to $1,700 this quarter; S&P 500 to pull back 300 points
(Kitco News) - Gold prices are on track for another rally into the $1,700 an ounce price range on the back of frothy equity markets, this according to Patrick Ceresa, founder and chief market derivatvies strategist at Big Picture Trading.
"I feel that generally, the bull trend for gold is intact as long as gold can hold above $1,500 during this consolidation that we're in. If that's the case, then this is actually a compelling buy on dip on gold for a move towards $1,700," Ceresna told Kitco News on the sidelines of the Vancouver Resource Investment Conference.
On equities, Ceresna said the S&P 500 is due for a 200 to 300 point drop this quarter.
“I don’t think it’s the valuations that are making me concerned. I look at the way the liquidity flows in the market and we’ve entered a frothy parabolic phase in the markets with stocks such as Apple and Tesla driving this huge impulse higher. The S&P 500 tacked on just double-digit returns, 500 S&P points in just four months. These types of advances almost always mean-revert,” he said.
Ceresna added that this stock market correction doesn’t necessarily need a catalyst, a correction would simply come from investors taking their gains after a very long bull run.
He said that it is unlikely we will see a recession this year, at least not before the presidential elections in November.
“Recessions take six months to confirm and there isn’t any data that’s turning so the likelihood of a confirmed recession by the election is very unlikely,” he said.