Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Gold Surges on War Fears. Here's Why the Rally Could Stick...

Published 10/20/2023, 02:49 PM
Updated 03/21/2024, 09:40 AM

The reason for the rally, of course, was Israel’s forces massing for an invasion of Gaza. No one wanted to be out of the gold market going into the weekend. It was a classic safe-haven event.

NY Spot Gold Chart 10.13.23

So, bad news for the world and, in a typical bittersweet fashion, good news for gold bulls.

Now, while all of us who have portfolios packed with metals and mining shares are happy to see these rising prices, whatever the reason, there is risk ahead. And that’s precisely because of the reason for this rally.

As experienced investors in the sector know well, gold typically spikes on these kinds of geopolitical events, only to fall right back down (or lower) once things calm down.

But as I noted recently, there is a chance that this time is different. The Federal Reserve’s rate-hike cycle is either peaking or has already peaked. Chairman Jay Powell & Co. would be happy to have an excuse to lay off further hikes, or even pivot.

And this crisis in the Mideast, which is very likely to escalate and expand, could be just the excuse they need. In short, if this geopolitical event forces a shift in monetary policy, it will provide the fuel to take this rally in the metals far, far higher.

That’s the bottom line: With so much at stake in the weeks just ahead...with such great opportunities accompanied by such massive risk...we have to prepare for any scenario.

Original Article

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.