The price of gold jumped to some of its highest levels in the last 7+ year. But while the dollar moved up a bit on April 15th, the climb took a pause. This isn’t to say the party’s over. But it appears gold prices have made a new home above $1,700 for the time being. From a technical perspective, the low price has held above $1,730, which many think is a great sign for the precious metal.
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“I love gold, and you need some in your portfolio,” Bill Baruch, president of Blue Line Capital, said Tuesday on CNBC’s “Trading Nation.” The charts show “an inverse head and shoulders pattern — a beautiful technical pattern that played out through March into April and we’re now breaking out above. It broke out above it.”
This type of pattern forms when a stock makes an initial low, drops to a new low, then bounces back to a higher low. That higher low is typically around the same level as the “initial low”. Typically this inverse head and shoulders is suggestive of a bullish reversal in trend.
“I do believe gold over the rest of this year will get to $2,000. I think it should be in your portfolio. The massive liquidity injected by the Federal Reserve, it’s going to support asset prices like equities, but it’s also going to support gold,” Baruch continued. If you look at gold stocks like Barrick Gold (GOLD), Newmont (NEM) and even smaller cap stocks like Yamana (AUY) and Kinross (KGC) the same bullish sentiments hold true. But are record highs in the cards?
What’s Next For Gold?
In a media update April 15, the U.S. Mint said it is shutting down the facility due to the increasing number of COVID-19 cases in Orange County, New York. “My commitment to the health and safety of the Mint workforce is unwavering and continues to be my highest priority. These are challenging and unprecedented times, and decisions on Mint operations are made with the best interests of Mint employees first and foremost,” said Mint Director David J. Ryder.
Baruch’s target – a move to $2,000 – represents 13% upside and would take gold to record highs. Others still argue that extreme optimism should be even a thought right now. “Gold has no cash flow. So, you’re just trying to understand what the demand is going to be and that’s a bit of a gamble,” Steve Chiavarone, portfolio manager at Federated Hermes, argued against Mr. Baruch.
But no matter the camp you’re in, one thing’s certain. That one thing is gold is hovering in a range that hasn’t been seen since the last time it traded near record highs. Will this mark a new opportunity for the precious metal? Leave a comment on who you agree with more: Baruch or Chiavarone and why.
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