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(Kitco News) – The US dollar continues to dominate the gold market; However, the momentum in the US dollar could run out of steam, as the Fed is unlikely to continue to maintain its aggressive stance on monetary policy until the end of the year, according to a market strategist.
In a recent interview with Kitco News, Carly Garner, co-founder of brokerage DeCarley Trading, said that gold, since it is holding critical support levels, is in a good position to hit all-time highs when the USD momentum kicks in. to vanish.
Garner said she expects the US dollar index to hold resistance below 105 points. Finally, you see that the US dollar will eventually retest the support at 99 pips.
“If we break down below this support level, we will likely go back to the mid-90s, and if that is the case, that would be a game-changer for gold,” she said. “Suddenly, we are no longer looking at $2,000 gold, but rather all-time highs.”
Garner said that the collapse of the US dollar may eventually push gold prices to $ 2,600 an ounce.
Garner said one of the reasons she sees so much potential in gold is how resilient it has been in the past few months. And while US bond yields remain near 15-year highs above 4%, gold held crucial support around its 20-day moving average.
She said the peak in long-term yields would remove another headwind for gold.
“We’re basically sitting on the largest net bond deficit ever, and at some point, that’s going to dissolve on its own,” Garner said. “This trade will be resolved and that will drive interest rates lower. When positioning is this extreme, it’s only a matter of time.”
One factor that could lead to a sell-off is for the Fed to shift to a more neutral monetary policy stance, leaving interest rates unchanged until the end of the year. According to CME FedWatch, the markets see a more than 90% chance of not raising interest rates later this month and only a 50/50 chance of one in November.
While Garner is bullish on gold, she added that the market could remain volatile in the near term, with prices likely to retest support at $1,900 an ounce. She said that if the downward momentum picked up, she wouldn’t be surprised to see prices drop to $1,980 an ounce.
“I wouldn’t give this up unless we break down below that level, let’s say $1,800,” she said.
Although Garner is bullish on gold, she is not as enthusiastic about silver. She said she prefers penetrating precious metals through gold.
“Eventually, silver will outpace gold, but I don’t think that will happen now,” she said. “I guess the only thing I can say is that on a shorter timeframe, silver is usually bought at around $20.”
Disclaimer: The opinions expressed in this article are those of the author and may not reflect his views Kitco Metals Company The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot or the author guarantee this accuracy. This article is for informational purposes only. This is not a solicitation for any exchange of commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article shall not be liable for losses and/or damages arising from the use of this publication.
(tags for translation) Decarie Trading