What happened and some potential catalysts:
- On Thursday, gold traded higher by more than 2%, closing above $1,390, the highest level since 2013 and the largest single day move since late 2018, and is continuing its push higher early this morning.
- Gold is up more than 6% (in US dollars) in June, the strongest one-month rally in two years
- The move is a byproduct of persistent levels of uncertainty, lower rates and momentum
- The Fed’s dovish statement on Wednesday all but confirmed market expectations that they will cut rates at least once and, according to market expectations, up to three times by the end of the year
- The 10-yr yield briefly traded below 2% on Thursday – a level not seen since 2016 – while the US dollar continued to weaken
- As we’ve noted in our recent research and commentary, gold tends to perform well when the Fed shifts to a neutral or dovish stance
- Other positive potential catalysts include growing geopolitical concerns between the US and Iran, trade tensions, Brexit concerns and other macro risks.
- $1,365 was a multiyear resistance level many traders viewed as an important barrier to substantiate a bullish call on the price of gold
- The sharp move through that level on heavy volume is very positive, suggesting the supply of sellers has subsided and there is potential upside
Gold futures price (weekly chart)