Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek Radio: Gerald Celente and Peter Schiff, and Chris Waltzek
By: radio.GoldSeek.com

The Housing Market Is Sliding Down The Wall It Hit In Late August
By: Dave Kranzler

Political Theater Goes into Overdrive as Shutdown Looms
By: Clint Siegner

SWOT Analysis: Will the Fed Hike Rates Again This Week?
By: Frank Holmes

Stock Market’s Stars are Crossed for an Ursa Major Upset
By: David Haggith

Watching For A Breakout In Gold
By: Justin Smyth

Technical Scoop - Weekend Update December 17 2018
By: David Chapman

A Turn In The Tide
By: Plunger

Gold Market Update
By: Clive Maund

Palladium?
By: Larry LaBorde

 
Search

GoldSeek Web

 
The battle between bearish fundamentals and bullish sentiment continues


By: Steve Saville, The Speculative Investor

 -- Published: Monday, 8 October 2018 | Print  | Disqus 

In a 13th August blog post I noted that for the first time this year the sentiment backdrop had become decisively supportive of the gold price. I also noted that the fundamental backdrop remained unequivocally gold-bearish, and then attempted to answer the question: What will be the net effect of these counteracting forces? My answer was that regardless of sentiment there could not be an intermediate-term upward trend in the gold price until the fundamentals turned gold-bullish, but a $100 short-term rebound was possible even without a significant fundamental improvement. What’s the current situation?

The current situation is similar. Since my 13th August post the sentiment backdrop has become slightly more bullish, the fundamental backdrop has become slightly more bearish, and the price is roughly unchanged at around $1200. Therefore, it’s fair to say that the battle between bearish fundamentals and bullish sentiment has been a draw thus far.

Just to recap, the most important fundamental drivers of the US$ gold price are credit spreads, the yield curve, the real interest rate (the TIPS yield), the relative strength of the banking sector, the US dollar’s exchange rate, the bond/dollar ratio and the general trend of commodity prices. These are the inputs to my Gold True Fundamentals Model (GTFM), a chart of which is displayed below.

Apart from a short period from late-June to mid-July when it was ‘whipsawed’, the GTFM has been continuously bearish since mid-January. No wonder the gold market has struggled this year.

 

The upshot is that due to the bullish sentiment a bounce in the gold price of up to $100 is still a realistic short-term possibility, but due to the bearish fundamentals a much larger rally is not.

The fundamental backdrop is always shifting, so the fact that it is gold-bearish right now doesn’t mean that it will remain so for a long time to come. For example, additional weakness in the stock market would improve gold’s true fundamentals if it caused a significant decline in economic confidence and fostered the belief that the Fed will put its rate-hiking program on hold. However, until/unless such a shift happens, expectations regarding gold’s short-term prospects should be modest.

 


| Digg This Article
 -- Published: Monday, 8 October 2018 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus


Regular financial market forecasts and analyses are provided at our web site. We aren’t offering a free trial subscription at this time, but free samples of our work (excerpts from our regular commentaries) can be viewed here.

E-mail: Steve Saville



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.