The US dollar continues to dominate the gold market. But the Federal Reserve is unlikely to maintain its aggressive monetary policy stance through the end of the year, according to one market strategist. So the dollar’s momentum is probably running out. This means new highs for the yellow metal!
It is possible that this development will increase the price of gold to peaks!
Gold holds critical support levels, says Carley Garner, co-founder of brokerage firm DeCarley Trading. That’s why the gold price is well positioned to hit all-time highs as the US dollar’s momentum begins to fade, she says. Meanwhile, Garner notes that he expects the US dollar index to show resistance below 105 points. Ultimately, she thinks the US dollar will retest the 99-point support. Based on this, Garner points out the following peaks:
If we break below this support level, we will likely return to the mid-nineties. If that’s the case, this would be a game changer for gold. Suddenly we’re looking at all-time highs, not below $2,000. It’s possible that a collapse in the US dollar could eventually push gold prices to $2,600.
According to the strategist it’s just a matter of time
Carley Garner also explains why she sees such great potential in gold. One of them, she says, is the resilience he’s shown over the past few months. cryptocoin.com As you follow from , bond yields in the USA are above 4%. This means that it is close to the highest levels in 15 years. However, gold has formed a critical support around its 20-day moving average. Therefore, Garner predicts that a peak in long-term yields would remove another headwind for gold. In this context, Garner comments:
We are sitting on the largest net deficit in bonds on record. This will resolve itself at some point. This trade will unravel, which will drive interest rates down. When positioning is this extreme, it’s only a matter of time.
I won’t give up unless the gold goes below this level!
One factor that will fuel the sell-off is the Federal Reserve’s shift to a more neutral monetary policy stance, leaving interest rates unchanged until the end of the year. According to CME FedWatch-Tool, markets see the probability of no interest rate hike this month as over 90%. Moreover, he gives only a 50% chance of an interest rate hike in November.
While Garner is bullish on gold, he says the market will likely remain volatile in the near term. In this regard, he adds that it is possible for prices to retest the support around $1,900. Garner notes that he would not be surprised if it drops to $1,880 if the downward momentum increases. However, he says, “I wouldn’t give up on gold unless it went below $1,800, let’s say.”
Silver or gold?
While Carley Garner is on the rise for gold, she doesn’t have the same enthusiasm for silver. She says she would rather play a break in precious metals over gold. He explains his views on this matter as follows:
Eventually silver will outperform gold. But I don’t think that will happen now. I guess all I can say is that in a shorter time frame, silver is usually a buy around $20.
