Can gold shoot higher next quarter?
Maybe, but it needs to close above $1,300 in September, says one analyst who closely tracks commodities.
“Back at key levels, $1,300 an ounce in gold and $50 a barrel in crude oil, both markets are ripe for movement, with upside gaining favor,” said Mike McGlone, commodities strategist for Bloomberg Intelligence, in a report Monday.
“Gold is back at key pivotal support, leading commodities in increasing futures open interest and positions in 2017. Liquidation risks are high, with the lowest volatility in over a decade. If gold ends September above $1,300, it should see more aggressive buying.”
After slumping to three-week lows last week, gold futures made a comeback Monday on renewed threats from North Korea. The safe-haven asset rallied 1.2%, with December Comex futures last at $1,313.20 an ounce.
The end of this month, which would also mark the end of the third quarter, will prove to be “pivotal for gold,” the New-York based analyst said.
A key factor to watch is the U.S. dollar, which has a historically inverse relationship with the gold price. But based on McGlone’s research, it might not be too much of a concern for gold bugs.
“The end of September should be pivotal for gold -- upside has favor with the dollar potentially having peaked,” he wrote.
“Unless the U.S. dollar reverses the 2017 downtrend, the world's top traded commodity futures, gold and WTI crude oil, should sustain above the key levels -- $1,300 an ounce and $50 a barrel.”
But even if gold manages to hold above that key psychological area, don’t expect smooth sailing next quarter, he suggested. “[G]old volatility is likely to pick up in 4Q,” McGlone warned.
“October-November has been the worst period for gold the past five years, but the dollar was rallying,” he explained.
However, McGlone remains positive given that volatility in the marketplace is low, which would suggest it should take “less of a spark for gold to rally than to fail.”
Maybe, but it needs to close above $1,300 in September, says one analyst who closely tracks commodities.
“Back at key levels, $1,300 an ounce in gold and $50 a barrel in crude oil, both markets are ripe for movement, with upside gaining favor,” said Mike McGlone, commodities strategist for Bloomberg Intelligence, in a report Monday.
“Gold is back at key pivotal support, leading commodities in increasing futures open interest and positions in 2017. Liquidation risks are high, with the lowest volatility in over a decade. If gold ends September above $1,300, it should see more aggressive buying.”
After slumping to three-week lows last week, gold futures made a comeback Monday on renewed threats from North Korea. The safe-haven asset rallied 1.2%, with December Comex futures last at $1,313.20 an ounce.
The end of this month, which would also mark the end of the third quarter, will prove to be “pivotal for gold,” the New-York based analyst said.
A key factor to watch is the U.S. dollar, which has a historically inverse relationship with the gold price. But based on McGlone’s research, it might not be too much of a concern for gold bugs.
“The end of September should be pivotal for gold -- upside has favor with the dollar potentially having peaked,” he wrote.
“Unless the U.S. dollar reverses the 2017 downtrend, the world's top traded commodity futures, gold and WTI crude oil, should sustain above the key levels -- $1,300 an ounce and $50 a barrel.”
But even if gold manages to hold above that key psychological area, don’t expect smooth sailing next quarter, he suggested. “[G]old volatility is likely to pick up in 4Q,” McGlone warned.
“October-November has been the worst period for gold the past five years, but the dollar was rallying,” he explained.
However, McGlone remains positive given that volatility in the marketplace is low, which would suggest it should take “less of a spark for gold to rally than to fail.”
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