Gold Besting $2000/oz – It IS Different This Time
From The Maven Letter: 30 November 2023
Gold broke up through $2000 per oz. decisively on Friday and has stayed aloft since. It’s only been a few days but sticking above $2000 for a week – and not just lingering just above but running as high as $2044.45 and then sticking above $2035 – is markedly different from the last few times gold bested this round-number resistance.
The clear reason is rates. The market is convinced hikes are over, a stance that various Federal Reserve officials have reinforced in the last while, and that conviction has bond yields falling. The most important factor for the gold price is real rates – gold rises when they fall – and real rates are now clearly falling.
It’s a classic investment move – buy gold when a rate hike cycle ends – and it seems investors are heeding that classic pattern. And they are also buying gold miners in the classic way: the GDX fund of major gold miners is up 6.8% over the week, providing almost 3x leverage to gold’s 2.4% gain.
It feels different this time. I want to credit my superb intuition for that…but it probably feels different because this time gold is not fighting
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