Gold Digger: Consumer confidence is in the toilet — own some gold, expert says
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Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
Consumer confidence is down, and that’s good for gold, according to Jeff deGraaf, founder of Renaissance Macro Research.
“We don’t find inflation, real‐rates, money supply or any of the theoretical inputs to be of much use for golds forward returns,” said deGraaf in a note.
“We do, however, find consumer confidence to be a meaningful input, with high levels of confidence preceding weak forward returns and a dearth of confidence setting up bullish returns.”
The US consumer confidence index hit an 11 year low in late March. Bullish gold market incoming?
“Consumer confidence is in the bottom decile, own some gold,” deGraaf said.
It’s common to associate gold’s performance w/ inflation, M2, deficits and other theoretical inputs (we agree philosophically), but history is less supportive of the linkage. We find consumer sentiment a better input accounting for deflationary and inflationary rallies. $GLD pic.twitter.com/sCsaLmkwyK
— RenMac: Renaissance Macro Research (@RenMacLLC) April 7, 2022
Gold has continued sideways trading this week.
“Gold has confined itself to a rough $1920.00 to $1940.00 an ounce range this week and is showing little proclivity to react to geopolitical events or moves in the US Dollar or US bond yields,” says Jeffrey Halley, senior market analyst at OANDA.
“You could interpret that as either bullish or bearish for gold.
“For my part, despite the weeklong holding pattern, I believe the risks are still skewed to the downside for gold, especially if US yields and the US Dollar keep climbing.
Only a rally through $1970.00 changes that outlook.”
Failure of $1915.00 an ounce will signal a retest of important support at $1880.00, Halley says.
“Failure of $1880.00 should see a capitulation of long positions, extending losses to the $1800.00 region.”
While the gold price has gained 7.2% year-to-date palladium is the standout precious metal, bouncing back from a late 2021 slump to be up 22.4% YTD.
Here’s how ASX-listed gold & silver stocks are performing:
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