Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James, I am finding the "Gold Sector" among the most difficult to understand. Primary factors such as fear of inflation, higher interest rates, recession, even the unfortunate war in Ukraine are all factors known to drive higher the price of gold. Despite this the gold sector failed to perform so far. My question is what drives gold stocks higher and what increases investor's interest in it?
Hi Khaled,
Gold is driven by a mixture of factors including interest rates, the $US, inflation and global uncertainty. The first 2 are standout headwinds and the last 2 theoretically tailwinds BUT its been all 1-way traffic over recent months as bond yields surge to fresh decade highs and the $US/Yen made fresh 24-year highs on Tuesday night.
Until further notice we believe for gold to bounce / rally a pullback is required by both bond yields and the $US, we can see this unfolding into Christmas but these are calls against a well established and strong trend hence caution is warranted.
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