Jackson Hole: big dollar moves expected; sell gold now or hold?
(Kitco News) - The annual Jackson Hole Symposium, a gathering of central bankers, economists, and financial institutions, will see its first ever virtual conference this week, and will likely set the tone for further U.S. dollar depreciation, said Gary Wagner, editor of TheGoldForecast.com.
“When you’ve got all of the major central banks getting together, they recognize the need for a long-term plan rather than what's the economy going to look like next year, they're actually looking out at the next decade. What that tells me is that they know that the crisis we're in is not going to be resolved overnight and so that's what's so critically important," Wagner told Kitco News. “I believe that it could have a detrimental effect on the U.S. dollar. If it does, we will see gold take off and that will indicate the bottom of this recent [gold price] correction."
Wagner noted that other central banks are also trying to depreciate their currencies, and markets will likely see a race to the bottom, although more downward pressure is expected of the U.S. dollar.
The recent decline in gold has put the metal in a short-term bear trend, Wagner noted.
“It is certainly a correction. It is certainly a dip in the price. I view it as a healthy dip,” he said.
Spot gold last traded at $1,929.90, down 0.6% on the day Monday. Gold has struggled to maintain momentum above the $2,000 an ounce once that level was breached.
Gold has climbed more than $500 an ounce since March lows. Wagner said that corrections are to be expected from rallies of this magnitude.
“Typically, a rally will last $100 to $150. A good rally may be $200 plus dollars. We saw the market move $600 in a four-month period of time, so for it to back off by $200 to me, is small change. I don’t look at it as a) a major correction and b) when we look at the charts, there’s been no technical chart damage,” he said.
Wagner does not see significantly more downside for gold at these current levels, and is not preparing to sell his positions right now.
“What we’re looking for is for the market to hit a particular Fibonacci retracement level, then I look for a particular candlestick pattern that’s a bullish reversal, and that’s the trigger that we use to enter our trades,” he said.
Physical buyers should ignore the short-term noise and buy on the dips, Wagner added.
“A half a year to a year from now, gold will be much higher. I can’t tell you what the noise will bring in the next two weeks, but I can tell you in the next year, I truly believe we’ll be looking at $2,200 or $2,300 an ounce gold,” he said.