Tim Hayes, a strategist at Ned Davis Research, said gold will be in trouble in the near future as markets are preparing for changes in the US monetary policy. The Federal Reserve is said to be considering cuts on its monthly bond purchases, and this may happen by the end of this year.
But so far the economic environment that drove gold to record prices last year remains stable, not to mention that dollar, despite showing some short-term dynamics, is still far from its record highs. And compared to gold that is only 13% lower from its last year's record, dollar will have a hard time finding significant bullish support amid low interest rates.
Back in May 2020, Hayes gave a long-term signal to sell dollar. Surprisingly, this remains valid even today despite the recent upward momentum in the currency.
Gold is also expected to remain in a bull market because even if inflation does not rise as sharply as it did in the 1970s, investors will still be nervous about higher price pressures. And since the overall environment will not change anytime soon, Hayes said it will not take long for investors to see the value of the yellow metal again. In addition, a correction in stock markets can provoke a further jump in gold prices.
Hayes also noted that the recent sell-off in gold opened new opportunities to bullish investors, as the crash below $ 1,700 two weeks ago allowed buyers to take long positions and push prices above $ 1,800.
