Sorry, Gold Isn't Verging On A Massive Rally

With Gold once again near all time highs in recent sessions, we are hearing much chatter from the Gold Bugs who are preparing for an explosive rally. The long-term charts (see below) suggests that caution is warranted. This is not the kind of price action that we have historically seen in bull markets that have lifted resistance and traded far above the highs.

Rather, we see a market that is showing several signs of weakening conviction; all of these boil down to bulls losing conviction as momentum wanes on each successive rally.

Strategically we continue to see concerns over the USD and the EUR, combined with consensus expectations for softer growth levels going forward for several years, as the primary narrative driver for bulls in the absence of inflation. The fact that economic growth, while anemic, is real creates an offset to this argument as other asset classes such as equities may take short term favor (note that the near-term correlation between gold and equities is volatile). (more)