Precious Metals
The Bullish Case For Gold Into Year-End
While gold has not done much in 2022 in terms of absolute returns, the SPDR Gold ETF (GLD) has indeed outperformed the SPY by about 12% year-to-date. So…
While gold has not done much in 2022 in terms of absolute returns, the SPDR Gold ETF (GLD) has indeed outperformed the SPY by about 12% year-to-date.
So why has gold not done better as a safe haven? It’s all about the US Dollar.
First, let’s review gold’s role as a “safe haven” during bear market phases… then we will get back to the US Dollar.
While gold has struggled in absolute terms, it has handily outperformed the S&P 500 index year-to-date. The GLD is down about 4% in 2022 while the SPY is down 15% over the same time period.
Why has gold not been a better safe haven while equities have been in a consistent bear market phase in 2022? Quite simply, the strength in the US Dollar has prevented gold from fulfilling this traditional role!
Every month in 2022, the US Dollar has made a new high for the year… until October. The $USD has now made a pattern of lower highs and lower lows over the last six to eight weeks, indicating a potential change in trend.
This short-term weakness in the US Dollar has provided space for risk assets like equities and commodities to reverse their recent downtrends and push to the upside.
In today’s video, we’ll break down the charts of the US Dollar and gold, discuss the relationship between these two charts and identify key technical levels to watch.
- Is gold still a safe haven in 2022?
- Why is the price gold so tied to the US Dollar, and how might this relationship evolve going forward?
- What are the key levels for watch for GLD and spot gold prices?
For deeper dives into market awareness, investor psychology and routines, check out my YouTube channel!
(VIDEO) The Bullish Case For Gold with Price Analysis
Twitter: @DKellerCMT
The author may have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
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