The glitter appears to be coming off the rally in all things gold – by Tim Shufelt (Globe and Mail – September 7, 2019)

After a stellar three-month stretch for gold bullion and the stocks of companies that dig it out of the ground, the glitter appears to be coming off the rally in all things gold.

An easing of global recession fears and a nascent rebound in long-term bond yields have taken back some of the gains in gold and gold equities through an otherwise ascendant summer.

As of Wednesday, gold prices were higher than US$1,550 an ounce for the first time since 2013, while the group of gold stocks within the S&P/TSX Composite Index was up by more than 50 per cent on the year. In the last two trading days of the week, however, Canadian gold stocks declined by 8.1 per cent, while spot prices declined to US$1,507.

“We think that the rally in gold has run its course,” Simona Gambarini, a markets economist at Capital Economics, wrote in a note.

Markets have gone too far in expecting central bankers to stimulate the global economy, Ms. Gambarini said. For gold investors, the result is likely to be disappointing “when it becomes clear that the degree of monetary stimulus that investors are expecting in the U.S. and elsewhere will not materialize.”

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