Monday, June 4, 2018

Selling in May ready to change in June as the dollar, Fed, and geo-political events still unsolved

Nearly everyone knows the old market axiom that goes, 'sell in May, and go away'.  And in fact historically this has been pretty much true for the precious metals not only in that month, but for most of the summer.

Yet as we enter into June of 2018 there appears to be many more factors that could have a profound effect on gold prices here in the short term than in recent years, and that includes the effects of the Brexit vote of a few years ago that saw gold spike over $100 in a single day.
Gold will have a better month in June following a drop below the key psychological level of $1,300 an ounce in May, said INTL FCStone, adding that the U.S. dollar rally will run out of steam. 
The yellow metal prices are likely to trade between $1,280-$1,335 an ounce in June, wrote INTL FCStone analyst Edward Meir in a report published on Sunday.
One of the central triggers to give gold a reprieve is a stalling U.S. dollar, led by the sentiment that the Federal Reserve’s June rate hike has already been priced in by the markets. 
Trade war rhetoric will also play a central role in driving gold prices in June, the report pointed out. 
On top of that, there are a number of geopolitical risks to keep in mind as the summer gets going, including Italy, Spain and North Korea, the analyst added. 
“Italy and Spain, the region’s most heavily indebted countries (after Greece), continue to struggle politically, although the worse seems to be over,” he said. “The other major event will fall on June 12th, which is when President Trump is supposed to meet with the North Korean leader. Any semblance of a rapprochement will be net bearish for gold, albeit temporarily, since political events tend to have a short-term impact on prices.” - Kitco


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