GLDI - Gold Down. But Not Out
2023-12-12 01:40:00 ET
Summary
- The correction from gold’s recent record-breaking price spike has been largely as expected.
- What isn’t widely expected are the irresistible factors that will soon drive gold far, far higher.
- Gold is down another $20 on Monday as Treasury yields are up along with the Dollar Index.
By Brien Lundi
The correction from gold’s recent record-breaking price spike has been largely as expected.
But what isn’t widely expected are the irresistible factors that will soon drive gold far, far higher.
It hasn’t been easy watching the price of gold drop precipitously from its recent, record-breaking heights.
Even though a correction wasn’t surprising, and in fact was widely predicted, it’s still hard to see so much red on the screen where there had been so much green.
In fact, gold is down another $20 on Monday as Treasury yields are up along with the Dollar Index.
The chart below shows the dynamics of Monday’s market, and how rising yields have driven gold lower.
But even this short-term action is evidence of deeper trends in play. In particular, today’s auction of 10-year notes was met with tepid demand as investors demanded higher yields for the perceived risk.
This is just one of the bigger macro issues that will drive the markets, and gold, over the next few weeks and months.
In the weeks just ahead, the debt of both corporate borrowers and sovereign nations will be reset from ultra-low interest rates to today’s far higher levels... and this alone, if nothing else, will force the Fed and other central banks to begin cutting rates.
That will send gold and equities soaring. It’s why gold spiked to an all-time high just on speculation of a Fed pivot next year.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Gold Down. But Not Out