Gold’s rally making it look more attractive than it has in years – by Ian McGugan (Globe and Mail – June 8, 2019)

Gold is once again rallying, as it has periodically since its big fall six years ago. In contrast to those previous spikes, this one may actually succeed in blasting the metal out of its long-term funk.

Any rise would come as welcome news to gold investors. Since it tumbled in 2013, gold has been largely confined to a range between US$1,100 an ounce and US$1,350 an ounce. Following a 3-per-cent jump over the past week, aided by a weak U.S. jobs report on Friday, it is now trading around US$1,341.

In a note this week, Jeremy Hale, a strategist at Citibank, outlined a couple of bullish scenarios. He sees gold moving above US$1,500 if the United States and China fail to reach a trade deal and the U.S. Federal Reserve chops rates. He sees even more room for gains if there is no trade deal and the Fed keeps rates where they are now.

Other analysts have also talked up precious metals in recent months. Jeffrey Currie of Goldman Sachs has argued gold will benefit from a rising demand for defensive assets. Schroders PLC, the British money manager, says gold will benefit if central banks return to delivering dollops of monetary stimulus.

The case for gold rests on a couple of key arguments. The first argument is that there are few havens left for investors who want to shelter themselves against a slowing global economy.

For the rest of this article:

Comments are closed.