Banyan Gold Corp. (TSXV: BYN, OTCQB: BYAGF)
The New Yukon Gold Rush
After closing at a record high on Friday, the price of gold continued to rise on Monday and successfully broke through resistance below $2,100, as investors bet that the Federal Reserve will start cutting interest rates in the second half of this year.
The April gold futures contract on the New York Mercantile Exchange jumped $30.60, or 1.46 per cent, to close at $2,126.30 an ounce, the contract’s highest level since its creation in 1974.
Jess Felder, founder of the Felder Report, said in an interview with Kitco News that he has been looking for a breakout to the upside in gold, as the price action has formed some very bullish technical patterns.
Felder noted that, from a purely technical standpoint, the expected goal for gold in the short term is to go up a couple of hundred dollars, but the long-term goal is to rise to $2,700 or $2,800 in a year or two. From a purely technical point of view, gold looks very, very bullish.
Felder points out that credit conditions in global financial markets continue to deteriorate, and sooner or later the Fed will have to inject more liquidity into the market. And the fact that investment sentiment in the precious metals mining sector has fallen to its lowest point since the 2015 bear market is a very strong buy signal, suggesting that investors should keep an eye on trading opportunities in gold and silver miners’ stocks in the near future.
Peter Boockvar, chief investment officer at Bleakley Financial Group, said gold hit an all-time high of about $3,200 in 1980, adjusted for inflation. He said, “We still have a long way to go, and that speaks to the potential upside of the precious metal.”
Bart Melek, global head of commodities strategy at TD Securities, said gold started to rise after weaker-than-expected manufacturing data was released last week. The market’s expectation is that inflation could gradually slow as the economy weakens, which would provide room for the Federal Reserve to get serious about cutting interest rates. According to CME’s Fed Watch tool, traders are betting that the Fed will cut rates in June.
However, Melek cautioned investors that if economic data, especially the upcoming employment data including payrolls on Friday, is strong, gold prices could face resistance in the short term and could not rule out the possibility of retracing some of the gains recently.
