Gold has been holding steady despite a stronger-than-expected Producer Price Index. Given its resilience, some market pundits see it reaching fresh all-time highs after hitting a consolidation phase.
Wholesale prices rose 0.2% during the month of June, coming in hotter than expected. This won’t appease capital markets, which are looking for additional signs of deflation to confirm forthcoming rate cuts by the Federal Reserve.
Despite the uptick, gold was able to hold steady. The precious metal is up about 17% for the year, but it’s been trading sideways since the tail end of May. Nonetheless, the latest price movements could indicate that gold could finally break the sideways trend.
“While Friday’s Producer Price Index did take some momentum away from gold, the precious metal was able to hold critical support at $2,400 an ounce,” a Kitco report noted. “For some analysts, this is a strong indication that gold’s consolidation phase is coming to an end.”
The metal’s resilience comes amid a higher-for-longer interest rate environment. Still, it has been on a steady climb, rewarding patient investors.
“Gold is seeing fresh bullish momentum following relatively dovish comments from Federal Reserve Chair Jerome Powell, coupled with weaker-than-expected inflation in the Consumer Price Index,” the report added.
The floodgates to higher prices could certainly open once rate cuts occur. If that’s the case, investors may want to consider getting exposure now before prices trend higher.
“Recent statements from Federal Reserve officials have aligned with market expectations,” reported FX Empire. “San Francisco Fed Bank President Mary Daly expressed her anticipation of further easing in both price pressures and the labor market, which could warrant interest rate cuts.”
2 Options for Gold Exposure
Sprott has a pair of funds for gold exposure. One offers access to bullion in the convenient package of a fund, while the other provides indirect exposure via miners.
The Sprott Physical Gold Trust (PHYS) is for investors who want a more tangible investment experience. They can convert their shares of PHYS into physical bullion. This offers feasibility and flexibility when it comes to adding the precious metal to diversify a portfolio.
An alternate play on gold’s prices is available via mining offers opportunities in the Sprott Gold Miners ETF (SGDM). The ETF seeks investment results that correspond generally to the performance of the Solactive Gold Miners Custom Factors Index. This index tracks the performance of large gold companies found on Canadian and major U.S. exchanges.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
