(Kitco News) - Although gold remains caught under critical resistance at $2,050 an ounce, this market is primed for higher prices, according to famed commodities investor Dennis Gartman.
In his latest commentary, Gartman said that he sees the gold market, through the world’s biggest gold-backed ETF, SPDR Gold Shares, carving out a three-year quadruple top.
“Double tops usually hold, but history has often shown that triple and quadruple tops are broken through to the upside. Further, when these triple and quadruple tops are broken through from below, powerful bullish moves quite usually follow,” he said in his letter. “Further still, GLD traced out a rare monthly reversal to the upside in October as it took out September’s low and September’s high and closed materially above September’s high…a textbook reversal of very real consequence.”
Although Gartman is bullish on gold, he also noted elevated risks due to the recent blowoff top after futures hit an all-time high above $2,150 an ounce.
“The gold futures and spot gold charts traced out massive one-day bearish reversals; gold stocks, however, did not, leaving the markets technically confused,” he said. “Indeed, the charts of various gold miners and gold’s ETFs continue to look quite bullishly inclined and a close by GLD above $195/share would alleviate any bearish concerns and would signal the very real possibility of $230-$240 over the course of the next several months!”
Although the Federal Reserve’s monetary policy has been the biggest driver for gold through 2023, Gartman said that he expects safe-haven demand driven by geopolitical uncertainty to overshadow any inflation risks.
“I have always considered an investment in [gold] to be a two-sided affair: one side to hedge inflation risk and the 2nd side to hedge geopolitical uncertainties. Given the Hamas/Hezbollah/Iran circumstance and the Houthi incidents of recent vintage and of course, given the Ukraine/Russia circumstances, the geopolitical ‘side’ now trumps,” he said.
As for the Federal Reserve’s monetary policy, Gartman said that although interest rates have peaked, a potential rate cut remains “off in the distance.”
“Regarding the so-called ‘Pivot,’ it shall depend upon the definition of pivoting for if ‘Pivot’ means that the Fed is simply done with raising the o/n fed funds rate, then the Fed has, in fact, pivoted; however, if ‘Pivot’ means that the Fed has to actually cut the funds rate then the ‘Pivot’ is at least several…and perhaps many… months into the future. The latter is my definition of ‘Pivoting,’ and so in my eyes, the Fed has not yet ‘Pivoted,’” he wrote.
According to the CME FedWatch Tool, markets see a more than 80% chance of a 25 basis point cut in March.
