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Several analysts expect the gold price to rise further this year and possibly break through $1,400 per troy ounce again. In a interview with CNBC Jeffrey Gundlach, an analyst at DoubleLine Capital, said gold is struggling to break through $1,350 per troy ounce, but that the price is not going down.
"The gold price has been off the radar for a while now and it is interesting to see that gold no longer seems to have any momentum above $1,350 per troy ounce. But it doesn't go down either, so it moves sideways. All three markets: Gold, the dollar and the 10-year US Treasuries are linked. They're all going sideways now after previous big moves."
According to analyst Bill Baruch of Blue Line Futures, the steady rise in the Gold price A feature of recent years, in which the precious metal is setting higher and higher bottoms and building a solid foundation for a new bull market. He expects the price of the precious metal to pass $1,400 per troy ounce in the second half, mainly because of the negative sentiment about the dollar.
According to Baruch, the U.S. dollar is under pressure due to Trump's large fiscal stimulus plans and the threat of a trade war between the United States and China. Both, according to him, will have a negative impact on the dollar, where gold as a safe haven.
"You really have to take a step back from the forest to be able to see the trees. This gold market bottomed out in 2015 and set higher and higher bottoms in 2016 and in 2017. This is very constructive. Since the peak in January, there has been almost a bull market. One of the reasons I'm so positive about gold is that I'm so negative about the dollar. I think the dollar is going to fall further and the whole rally of 2014 will be wiped out. I think there is still more room for a decrease, as much as 5 to 7 percent.
President Trump recently signed off on a $1.3 trillion spending program. We're going to have the biggest increase in defense spending in fifteen years. If you look at the dollar index, it peaked around 2001 and 2002. Before that, there was also a large increase in defence spending. So I think there's a lot of downward pressure on the dollar and that means gold is going to have a good second half of the year. I see the gold price going through $1,400 for August or September, and then we also have the looming trade war."
Larry McDonald of the Bear Traps Report is also positive on gold, because he believes it is the safe haven to which people will flee if stock prices start to fall again. He notes that bonds normally rise when stocks become cheaper, but that is no longer the case today. Instead, we see that bonds are also doing poorly, making it less useful to spread your risk between these two traditional asset classes.
"This is creating a flight of capital from bonds and equities to alternatives such as gold. I'm extremely positive at this level."
