Kiss Of Life For Gold

The narrow trading range in stocks continues, and the shallow sideways correction will eventually resolve itself with another upleg. The signs are countless, and the riskier part of the credit market spectrum agrees. As money flows from the Treasury markets, and sizable cash balances are sitting on many a balance sheet, there is plenty of fuel to power the S&P 500 advance.

With volatility in the tame low 20s and the put/call ratio again moving down, the bears‘ prospects are bleak. As I wrote last week, their time is running out, and a new stock market upleg approaches. It‘s the bond market that‘s under pressure, with both investment-grade corporate bonds and long-dated Treasuries suffering in the accelerated decline.

Gold is the most affected, as the sensitivity of its reaction to the rising long-tern yields, has picked up very noticeably. How long before these draw both the Fed‘s attention and action – what will we learn from Powell‘s testimony on Tue and Wed? And when will the much-awaited stimulus finally arrive, and force repricing beyond the metals markets?

Before that, gold remains on razor‘s edge, while silver leads and platinum flies for all the green hydrogen promise. The dollar has given back on Thu and Fri what it gained two days before, and remains in its bear market. Not even rising yields were able to generate much demand for the world reserve currency. Its lower prices stand to help gold thanks to the historically prevailing negative correlation, counterbalancing the Treasury yields pressure.

Plenty of action that‘s bound to decide the coming weeks‘ shape in the precious metals. And not only there as oil experienced 2 days of losses in a row – practically unheard of in 2021 so far. On Saturday, I‘ve added a new section to my site, Latest Highlight, for easier orientation in the milestone calls and timeless pieces beyond the S&P 500 and gold. Enjoy!

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Monica Kingsley 1 week ago Author's comment

Just a quick note - what I wrote yesterday about the market outlook and sentiment, remains valid also today - S&P 500 and precious metals.

Where are the gold bears? Yesterday, or now? The sentiment was so outrageous, and the price action positive for a quick reversal that we've witnessed yesterday. Precious metals are obviously not down and out, and scary targets don't really apply.

Meanwhile stocks continue in their shallow correction - no sign of a top really, no sign of a deep correction now, next week, month or whenever. When it's (about to) appear, you'll learn from me right away.