Sunday, March 25, 2018

The coming week forecasts for more turmoil in stocks, higher gold prices, and trade wars expanding to the level

While a 10% drop in U.S. stocks may appear to only be a correction after equity markets went more than 15 months without even a 3% pullback, Friday's close was the second time in the last two months that the Dow challenged that 10% threshold.

Jan. 26 - Dow at 26,616

Feb. 8 - Dow at 23,860 - 10.4% decline

Feb. 26 - Dow recovers to 25,709

March 23 - Dow at 23,533 - Lower lows and an 11.6% decline since all-time high

Trading week beginning March 26?

Tomorrow also officially begins China's new Yuan-denominated oil contract, and at a time when the U.S. is ramping up both economic and military pressures on the Far Eastern power.  And with global central banks focused on tapering their balance sheets and raising interest rates, the likelihood of intervention on the scale we saw for the five years leading up to 2018 appears to be fairly slim.

So what does this mean for gold and the gold price going forward?

Gold was strongly pushed down early last week, but has recovered up to close within $30 of a key resistance level ($1378).  And according to a number of sources, it could very easily move to attack this resistance over the next few days, especially dependent upon what global equity markets do beginning on Sunday evening.

Amid the threat of a trade war breaking out between the U.S. and China, Wall Street and Main Street alike look for gold prices to continue their rally next week. 
The yellow metal rose sharply this week and by late Friday morning was up some $40 from the lows of Tuesday. The first leg higher came when the Federal Reserve did not appear to be signaling any increase in policymakers' pace of monetary tightening in 2018. The second came on renewed worries about a trade war, particularly between the U.S. and China. 
"Briefly cresting the important $1,350 level this morning, the yellow metal made substantial advances in U.S. dollar price as well as value compared to equities, commodities and major currencies," said Richard Baker, editor of the Eureka Miner Report. "Only oil outpaced the lustrous one on a percentage basis." 
Twenty-one market professionals took part in the weekly Kitco News Wall Street survey. Sixteen respondents, or 76%, called for gold prices to rise over the next week. Another five voters, or 24%, looked for gold to fall. Nobody called for a sideways market. 
Meanwhile, 945 voters took part in an online Main Street poll. A total of 575 voters, or 61%, said bullish. Another 281 voters, or 30%, said bearish, while 89, or 9%, were neutral. The Street


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