Gold prices are set for a correction in the coming months due to the re-emergence of risk-on sentiment, this according to Florian Grummes of Midas Consulting. In a recent article published on Seeking Alpha, Grummes said that gold’s recent uptrend could see a trend reversal soon.
“In the coming weeks…a rudimentary normalization after ‘Corona’ is expected. The easing rally in the stock market in the so-called ‘risk on’ mode could initially continue,” he said. “During such phases, gold is not needed and will most likely come under considerable pressure.”
Grummes noted that this would still only be a temporary correction for gold on its way to all-time highs. “In the medium and long term, the distortions of recent weeks are therefore extremely bullish for gold and especially for silver,” the report said.
However, short-tem, any benefits from monetary policy stimulus have largely been factored in by the markets, the report noted.
“In the short term, the gold price has already begun to price in the enormous expansion of the money supply. The rise from US$1,451 to US$1,747 in just a few weeks reflects this,” Grummes said.