Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

With The U.S Market Looking Bullish, How Do You Invest In Gold?

Commodities / Gold and Silver 2014 Dec 04, 2014 - 02:59 PM GMT

By: Submissions

Commodities

Nicholas Maithya writes: This year has been one of the best for US equities in recent times, at least judging by the movement of the leading indices – the S&P 500 (SPX), the Dow Jones Industrial Average (DJIA), and the NASDAQ Composite (IXIX), along with their corresponding ETFS. They have all rallied to record highs this year, albeit with dips and rebounds that often characterize an upward trending market.


On the other hand, things remained tough on gold and associated stocks and ETFs, with the precious yellow metal touching new lows last witnessed pre-2011, as the global commodity prices continued to suck in the pressure from a decline in demand.

Now based on recent developments, investors are expecting little to change next year, with the first half of 2015 likely to remain bullish for US equities. With the increase in interest rates looming, there is a great deal of optimism amongst investors with regard to the US equities. Some already have very bullish targets for the leading indices, with the S&P 500 highly tipped to touch 2,200 levels within the first six months.

However, during the second half of the year, things are expected to change significantly with the equities markets possibly facing a notable correction as the effect of increased interest rates begin to hit the economy.

With this in mind, investing in gold and other precious metals provides an interesting scenario for investors.

Gold Weekly Chart



The price of gold could drop further before the end of the year. The current trend indicates that the immediate support level of about $1,174 might not hold to see the year out and hence a drop down towards the $1120-$1150 region.

However, depending on the US economic data expected to come out early next year (economic growth for Q4), there is a chance that the price of gold could bottom at around the $1,150 mark before rebounding back to $1,175 by February.

According to a World Bank report, the price of gold is expected to oscillate between $1,240 and $1,275 per troy ounce for the majority of next year.

For instance, the winter has been a huge factor for dismal economic data over the past, and this is unlikely to change, especially after the US ended QE. Additionally, countries like China, which is one of the world’s leading buyers of gold bullion is expected to boost demand for gold as the country’s economy begins to stabilize after a recent slowdown.

However, with the Swiss having rejected a plan to invest the country’s wealth in gold bullion, there is likelihood that this could cut some of the investor optimism, which could then slowdown the pace of gold price recovery. In fact, the decision by the Swiss could accelerate the drop towards the $1,150 level before the end of the year.

Gold Monthly Chart



Now, looking at the monthly chart, the price of gold appears to have several more targets on the way up than the way down. If the price was to drop anywhere below $1,100, then that could trigger a major meltdown.

However, with the US expected to raise interest rates early next year, this could be what will eventually trigger a major surge in the price of gold. We are looking at a possibility where, if the Federal Reserve stalls the process, then it could send the wrong message about the real status of economic recovery.

On the other hand, if the Fed raises the interest rates and then everything backfires, then that would send butterflies into the stock market, which would trigger a huge demand for gold havens.

The idea of ending QE, however, does not resonate with some analysts who already harbour doubts about the so-called economic recovery. Additionally, with the price of oil hitting new lows last witnessed in 2010, there are fears that the current decline in the price of oil could be signaling the true status of the economy.

Conclusion

The global commodity prices have experienced headwinds largely due to tepid demand. The price of gold, to be specific, has dropped to levels last witnessed in 2010. The yellow metal has in the past, demonstrated its ability to recover after a slowdown and gold bulls will be hoping to see a similar trend in the next few quarters.

Therefore, next year could mark a significant turnaround period for the price of gold, because at the current price levels, the yellow metal presents an interesting opportunity for investors add to their portfolio. After peaking in 2011, the recent decline could be the perfect opportunity for investors to buy gold long-term.

By Nicholas Maithya

Financial analyst by profession with extensive experience in investment reseacrh and stock market analysis. I am currently a published author at Seeking Alpha, and a writer at Quantshare.Com, a trading software company.

© 2014 Copyright Nicholas Maithya - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in