The S&P 500 has completely retraced the Iran war move; the euro is back to pre-war levels; but gold isn’t.
There may be an opportunity there. Gold has come to life during US trading today and is up 2% to $4831. That’s still $440 below pre-war levels, or about 9%. Silver is even stronger today, rising 5%.
Both — I think — are examples of liquidity and leverage returning to markets. Investors feel comfortable leveraging up again and gold is a destination as it remains in a major bull market.
Moreover, the end of the war can add to gold’s fundamentals. At the simplest scale, it lowers tail risks for emerging markets. Turkey was forced to sell large amounts of gold during the war as it tried to defend the currency and others were equally vulnerable. In the aftermath of the war, there’s an incentive for all the big commodity-importing countries to further raise gold reserves now that they’ve seen the impact of a Hormuz disruption. They’ve also seen (again) how the US is no longer playing by the old rules, which is a rise to USD holdings.
The entire gold bull market basically started when the US weaponized the dollar by confiscating Russia’s reserves and the events in the Middle East underscore that’s more likely than it ever was. Trump is also proudly continuing to talk about his next ‘conquest’, often citing Greenland and Cuba. Notably, gold hit records earlier this year on the Greenland talk.
Add in declining inflation and a politically-appointed Fed chair with a clear mandate to cut rates, and the case for gold has rarely been stronger.
What can help from here is a technical break. Gold is now flirting with the April high of $4853 and if that breaks, there’s not much standing in the way of $5000 and beyond.
gold daily