Stephen Innes
SPI Asset Management
Gold markets
Gold got a lift from the move lower in US yields, and with Fed on hold forever narrative setting in, making it difficult for yields to rise, gold should remain supported on dips.
And given that the current tariff could eventually take its toll on H1 growth, there could be even more downside pressure as yields, and they could subsequently decline materially despite a positive outcome to the trade talks.
And with the Fed possibly expanding the balance sheet again in 2020, amid a plethora of macro uncertainties, it reinforces the notion that gold should be a regular feature in one's asset allocation during periods of market uncertainty, especially when interest rates are low.
The recent history of gold seasonally doing well in January (+5.22% for 5yr trailing average,) strengthens the case for gold to push higher in early 2020, not to mention US election political risk beckons a gold revival.
Ultimately with US rates on hold indefinitely, it should cushion golds fall on a knee jerk sell-off on a decisive phase one outcome. Also, the fed on hold forever narrative should tarnish the US dollar demand but support the glittering gold appeal.
IN the meantime, it's back to December 15 watch.
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