Every Bull Market Needs a Pulse -Jeff Valks, Senior Analyst
@TheGoldAdvisor · · 1 upvotes · 0 replies
Gold is bouncing around again.
$4,600 a month ago.
$4,120 today.
‘Way she goes.
As I write, the spot is trading around $4,150 an ounce, down roughly 3.1% on the day, extending a pullback that began late last week.
If you’ve lived through enough gold bull markets, or any bull market for that matter, you know the “drill.”
Straight lines are for architects, not investors.
Prices sprint, stumble, scare — and then remind you why you bought metals and juniors in the first place.
That’s the pulse.
Runners encounter hills, flats, headwinds, tailwinds.
The pulse rises and falls with the conditions.
The Usual Suspects
The World Gold Council’s latest Weekly Markets Monitor lays out the pressure pretty cleanly. Gold fell 2% last week to $4,261 as stronger U.S. economic data and hawkish Fed commentary pushed expectations for future rate hikes higher.
Treasury yields rose. The dollar strengthened.
This acts as the headwind against gold. For now.
Another headwind comes from real yields.
Ten-year U.S. real yields have surged toward the 2.92%–3.00% area, while nominal 10-year Treasury yields have pushed above 5%. That raises the opportunity cost of holding gold and usually gives the metal indigestion.
In layman’s terms: safer bonds are suddenly paying more, so some money that might have gone into gold is choosing the high yield instead.
When funds are dealing in billions, the guarantee gets the dough.
Positioning hasn’t helped either.
Global gold ETFs posted their first weekly outflow since mid-July, futures traders trimmed net longs, and near-term options positioning turned bearish.
When the room gets warm, some hot money heads for the exits.
It’s a Pullback, Not a Funeral
None of this is automatically bad news.
I say all this to level-set and explain how we dropped back into the $4,100s.
Bull markets need resets. Excess gets wrung out. Weak hands get nervous. Charts stop looking vertical.
Gold has also punched through several technical support levels the WGC was watching, and not to toot my own horn, but I’ve noted these same levels for you dating back to February.
Day-to-day prices don’t change the bigger setup.
China’s Golden Week begins October 1, historically a stronger seasonal window for jewelry demand and restocking, and the WGC sees room for postponed demand to reappear into year-end.
So yes, gold is pulling back.
But I’ll tell you — when I had time to run — I used to love the hills and the headwinds.
Those are the moments your legs, lungs and mindset get battle tested. Those are the moments you begin to build strength for the future.
There’s an obvious metaphor there.
And, when you do find yourself on a steady stretch of road with the wind at your back, everything just feels that much sweeter.
All of this is just the pulse of a bull market.
Gold’s current price would have had us jumping for joy 4 years ago.