Gold Speculators Pave The Way For 'Multiyear Bull Market In Metals'

Zinger Key Points
  • Expectations of looming rate cuts and geopolitical tensions are supporting gold price.
  • Gold miners have lagged gains in bullion prices, but they are beginning to catch up.

The price of gold continues its record run.

Speculators are piling into the precious metal at a rate not seen since 2019.

The price of gold futures dipped by 0.1% on Monday. But, a series of new record highs were struck last week. Over the five trading sessions of last week, gold added 4.3%

Exchange-traded funds that track the price of gold notched up similar performances. The SPDR Gold Shares ETF GLD gained 4.5% over the week; the iShares Gold Trust ETF IAU climbed 4.6%.

Also Read: Gold Stocks Could Gain In Catch-Up Rally, Says Peter Schiff: ‘Explosive Move Up Can’t Be Far Away’

The investment environment behind gold’s recent performance is a Goldilocks scenario of “just right” conditions according to many analysts.

Warren Patterson, head of commodities strategy at ING, said last week’s higher-than-expected jobless rate increased expectations that the Federal Reserve may be moving closer to looser monetary policy, which would be supportive of gold as the dollar weakens.

He added: “We expect gold prices to trade higher this year as safe-haven demand continues to be supportive amid geopolitical uncertainty with ongoing wars and the upcoming US election.”

Bill Baruch, president of commodities brokerage firm Blue Line Futures, said gold’s move was “the canary in the mine,” signifying the start of a “multi-year bull market in metals.”

He added: “Although gold has been in a bull trend since 2019, silver, copper and others have struggled. The tide is shifting. Be ready.”

Bullish Speculative Positions

The latest weekly speculative positioning data from the Commodity Futures Trading Commission showed net longs in COMEX gold rose by 63,018 lots — the biggest weekly addition since June 2019. It was the third consecutive week of increases and took total net long positions to 131,060 lots.

Gold miners, however, continued to underperform the commodity but, after falling 17.5% between Dec. 28 and Feb. 28 — as measured by the VanEck Gold Miners ETF GDX — gold miners shares might, finally be catching up some lost ground, having gained 15% since Feb. 28.

Newmont Goldcorp NEM, the top holding in the ETF, gained 6.3% last week. Barrick Gold Corp GOLD gained 5.5% over the week.

Now Read: Gold Surges In Blue Skies, Mining Sector Prepares For Bull Cycle: This ETF Offers 2X Leverage During A Run Higher

Image: Shutterstock

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