Invest
Bull market ‘still likely’ for gold
Despite falling below the US$1,300 an ounce mark, gold is predicted to remain a bullish market as risk factors abound in the coming months.
Bull market ‘still likely’ for gold
Despite falling below the US$1,300 an ounce mark, gold is predicted to remain a bullish market as risk factors abound in the coming months.
While the price of gold plummeted around 5 per cent or about US$75, making it the biggest weekly loss in two years, experts say it does not signal the end of what is anticipated to be a long-term bull market.
“The fall in the gold price this week is a result of a strengthening US dollar and more hawkish views emerging from the Fed. There are also lessening fears about the impact of Brexit and perhaps most importantly, Chinese markets are closed this week which has no doubt impacted the support for gold,” VanEck gold expert Joe Foster said.
Looking ahead, there are several factors which should support the price of gold.
“The global economy is weak and is in no condition to withstand higher policy rates. A Fed rate hike could work against gold initially stronger dollar, but in practice could be seen as a misstep that increases the risk of recession and financial stress. In addition, it creates imbalances if the Fed is tightening policy when every other central bank is easing,” Mr Foster said.
Persistent market volatility and caution among investors is likely to see gold remain strong as investors look to buy into a stable asset, with a number of key market events on the horizon.
Chief among them would be concern over the ramifications of a long-anticipated US Fed hike decision, which could see the price of gold rise, regardless of the outcome.
“If the Fed fails to raise rates in December, we expect dollar weakness and the gold price to strengthen. Nonetheless, another potential rate hike will likely be a repeat of the one last December where there was significant stock market volatility that drove investors to gold as a safe haven,” Mr Foster said.
Just as Brexit saw a rise in the price of gold, so too might other major political events, including the US presidential election.
“Trump victory, or anticipation of it, would be initially negative for shares on policy uncertainty and trade war worries, push up bond yields as the US budget deficit is likely to widen and US interest rates move higher and therefore positive for the US dollar,” AMP chief economist Shane Oliver said.
“We remain cautious on shares in the short term as event risk remains high for the months ahead including ongoing debate around the Fed and ECB, issues around eurozone banks, the US election on November 8, and the Italian Senate referendum and Austrian presidential election re-run, both on December 4,” he said.
All of this could sustain continuing investor anxiety, potentially keeping the gold price climbing and ensure an enduring bull market.
RELATED ARTICLES
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
