Gold has closed above its 100-day moving average for three days in a row, and has closed above its 50-day moving average every day since January 23rd. Up over 7% so far this year, and outperforming stocks as money shifts into safer assets, gold has analysts and investors taking a second look.
Citi Futures believes that gold will gain 8.5% on the year by the end of March, over $1300 an ounce. RBC Wealth Management sees gold hitting $1,400 an ounce by the end of the year. Even a report from megabank Goldman Sachs says that gold has broken through technical levels and has potential to the upside, with the 200 DMA only $12 away. The report notes that gold has not broken the 200 DMA to the upside in a little over a year.
Traders are looking at the lackluster results from stocks, and re-assessing their expectations of another boom year. In the reverse of what you would expect, improving economies in the U.K. and U.S. are dampening prospects in equities, as the Bank of England and the Fed start winding down 5 years of extraordinary measures to prop up markets.
The reduction in bond-buying on the open market by the Fed has rocked the economies of several emerging market nations, long the favorite source of yield for many traders. With Wall St. being weened off its “free money” binge, and plummeting currencies and civil unrest in several secondary markets, more investors are looking to take some profits and find some insurance. That’s where gold enters the picture.
A big story making the rounds right now is that the official numbers from China do not account for at least 500 metric tonnes of gold in 2013. Speculation is that it is being stored in a sovereign wealth fund by the Peoples Bank of China, and that this may have been going on for a while before being noticed. This news is also lending support to gold demand, and partially explains how gold has gained over $100 since the first of the year.
Have you taken a look at your portfolio lately? When was the last time you rebalanced your diversification? Perhaps its time to look at acquiring some precious metals to reduce the volatility of your assets in an increasingly volatile time.