Gold prices broke out the past week on strong fundamentals – reaching a high of $1,812/oz on Friday. From a technical perspective, prices should now be supported at 1,792, with additional support seen near the 50-day moving average at 1,781. Resistance is seen near the September highs at 1,830/oz.
Federal Reserve Chair Powell and Secretary of State Janet Yellen separately discussed that recent disruptions in the supply chain and tight labor market conditions would buoy price pressures for longer. Yellen sees the higher inflation readings persisting through Q2 next year (read: their transitory inflation narrative continues to look flaky).
The gold price was further boosted by U.S Treasury bond yields declining again on the back of lacklustre growth signs in the American economy – the Dallas Fed survey data that showed manufacturing eased in Texas. The U.S 10-year bond yield dropped nearly 10 basis points from 1.7% on Thursday to 1.62% today.
Two big names in the gold mining space, the former chiefs of Goldcorp Inc. – David Garofalo and Rob McEwen – both predict investors will catch on soon that global inflationary pressures are less transitory and more intense than central bankers and consumers price indexes suggest, and are betting on gold prices of $3,000 and $5,000, respectively.
The gold rally, when it comes, will be dramatic, Garofalo said in an interview Friday alongside McEwen, cited by Bloomberg. “I’m talking about months,” he said. “The reaction tends to be immediate and violent when it does happen. That’s why I’m quite confident that gold will achieve $3,000 an ounce in months not years.”
For gold owners, the key resistance level to watch will be c$1,830/oz – the yellow metal was last seen trading at $1,771/oz.