What gold price needs to break out of its range - Peter Hug
(Kitco News) - Rising yields and a stronger dollar from earlier this week have put pressure on gold, but the long-term macroeconomic fundamentals have not changed for the metal’s bullish outlook, said Peter Hug, Kitco Metals global trading director, who added that we are still in the early innings of a bull cycle.
“I think gold has been mirroring the dollar, and the dollar has been strengthening at the beginning of this week on the 10-year [yield] surging. Last Friday, when we spoke, the 10-year was trading around 1.12%, 1.14%, it’s now at 1.32%. So the yields on the 10-year have been going up this week and that has moved some assets into the dollar,” Hug said.
Whether or not gold has performed “well” over the last few months really depends on the reason for buying the asset in the first place, Hug said.
“If you are buying precious metals as a position in your portfolio and you have a specific reason, like you want to hedge against the balance of your portfolio, then you don’t look at this thing everyday, you’re just holding metals as an allocation, as a percentage of your portfolio. If you’re a trader, it’s a totally different ballgame. Right now, I can tell you that my sentiment looks bullish next week, I like the fact that gold has regained its 200-day moving average from a technical perspective. I would rather be long this market as opposed to being short the market,” Hug said.
Hug’s comment come as gold saw a slight bounce on Friday, last trading at $1,779.50 as of 2:30 pm EST, as the dollar index weakens on the session.