Stock Bulls Run – Will Gold Ones Too?

Resting on Friday, surging on Monday. Feeble downswing attempt defeated right after the open, and then just bullish price action. Retail data today, and another FOMC meeting tomorrow – I view the former as not too likely to spoil today‘s market action. About the latter, remembering the latest reactions to Powell pronouncements, I look for the markets to be affected to a much greater degree.

Don‘t look for material surprises, or be spooked by bets on the Fed tightening through dot plot adjustment or other forward guidance tools.I expect no change from what I wrote yesterday:

(…) Who could be surprised, given the modern monetary theory ruling the economic landscape? The Fed amply accomodative, one $1.9T stimulus bill just in, and a $2T infrastructure one in the making. That‘s after the prior Trump stimulus, and who would have forgotten how it all started in April 2020? The old congressional saying „a billion here, a billion there, and pretty soon you‘re talking real money“, needs updating.

Global liquidity isn‘t retreating exactly, emerging markets are building a solid base regardless of the dollar going higher two days in a row, and emerging market bonds are fighting to recover just as much as long-dated Treasuries. Coupled with the sectoral analysis, this is conducive for the unfolding stock market upswing and for commodities as well. We‘re still in a constructive environment for both, and I look within the latter at especially copper, nickel and iron to do well.

Meanwhile, the precious metals upswing is going fine, and the miners keep outperforming – both gold and silver ones. The time for the bulls isn‘t running out, and the real battles will come once the gold bulls conquer the volume profile thin zone around $1,760. Will the bulls reach it on tomorrow‘s Fed underplaying the threat of inflation and showing tolerance to its overshoot? That‘s certainly one of the possibilities.

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Monica Kingsley 1 month ago Author's comment

The momentary, intraday situation isn't rosy / convincing in the metals. GDX isn't markedly weak, but isn't outperforming either. I didn't like the run to $1,740 fizzling out - the upswing seems at a minimum pausing. TLT is the kingmaker of today's session. Not much can be gleaned from today's weak metals performance - as said, at least GDX isn't visibly lagging, but the upswing is seriously challenged nonetheless.