Gold may be due for a correction following last week’s Dutch election outcome handing the victory to the incumbent establishment candidate, and betting markets still expecting Emmanuel Macron to beat Marine Le Pen in France. As we all know, gold is more than an inflation/weak dollar hedge. It’s still the armageddon metal and we may not be heading for armageddon. At least not this week.
The SPDR gold (GLD 211,52 -1,22 -0,57%) holdings of the precious metal dropped further on Monday from 834 metric tons to 830.25 metric tons representing a change of -3.85%. Political uncertainties regarding The Netherlands is over. But there is still enough surrounding French elections and Brexit to provide some tailwinds for the gold rally, strategists from London-based brokerage firm ThinkMarkets wrote today. “It was last night that we had the first presidential debate over in France and anything which increases the chances for Marine Le Pen to win the elections could be devastating for the market,” says Naeem Aslam, ThinkMarkets chief market strategist.
Investors are also pricing in the possibility of three rate hikes. The market has priced in that there will be only two more interest hike this year. If more, then the dollar will increase and gold will decrease in value.
Any sell-off should be taken as an opportunity to build a client’s gold position, as political risks remain high enough that gold could still be an outperformer this year.
Maxwell Gold, Director of Investment Strategy at ETF Securities is headlining a webinar today at RIA Channel about investing in precious metals. WATCH NOW. Gold will discuss ways precious metals fit in a total portfolio. The webinar focuses on how gold and other metals react to market cycles. Some themes include precious metals in rising dollar and rising rate environments; valuations and income opportunities; portfolio construction and risk considerations when investing in gold and other metals.