Gold, XAU, GLD Price Analysis
- Gold prices[1] rushed up to another fresh seven-year-high to kick of this week’s trade.
- Comments from Jerome Powell on the television show 60 Minutes seemed to give another shot-in-the-arm to the risk trade, as Chair Powell said that there were ‘no limits’ to what the FOMC[2] can do with the lending programs available.
- The highlight of this week’s economic calendar[3] are inflation prints out of Europe, the UK and Canada, and out of the US, FOMC Minutes are released on Wednesday afternoon.
Gold Rushes up to Another Fresh Seven-Year-High
The month of March was a major inflection point in global markets, and with a little hindsight, that fact has become even more clear. While stocks spent much of the month in a precipitous decline, the final week of March was marked by strength in the risk-on trade as global governments, the US in particular, rushed to markets with multiple streams of stimulus. What started as an apparent short-cover rally soon turned into a fresh bullish trend; and almost 40% later, US stocks are continuing to climb as the series of stimulus programs and government action have so far helped to arrest that fear.
This theme was on display in Gold prices, in a couple of different ways. As panic was heating up in early-March, Gold prices fell by almost 15% as the US Dollar rallied by as much as 8.8%.[4] Normally, investors might expect risk aversion to help Gold prices but in this case, and in others where deflation is a realistic prospect and investors are rushing for cash – Gold can sell-off, as well. Case in point, during the depths of the Financial Collapse gold prices fell by more
