Carley Garner, co-founder of brokerage firm DeCarley Trading, has recently said that gold has been holding critical support levels and is now in a position to move into new all-time highs, at a time in which the U.S. dollar is losing momentum.
According to Kitco News, Garner predicted that the U.S. dollar index (DXY), which measures the dollar’s value against a basket of foreign currencies, might encounter resistance before reaching 105 points, and sees a potentially decline toward the 99 area. The DXY is at the time of writing at 104.9.
If we break below that support level, we are probably going back towards the mid-nineties and if that’s the case, that’s a game changer for gold. Suddenly, we are not looking at $2,000 gold but new all-time highs.
Should the dollar falter significantly, gold might soar to a staggering $2,600 per ounce, she estimates. Gold has been showing resiliency over the last few months, even as U.S. bond yields loom at nearly 15-year highs and fears of a recession loom. Treasury yields peaking would also be removing a headwind for gold, the analyst said.´
She added that we are “sitting on the biggest net short in bonds on record” and suggested that at some point these positions are going to unwind themselves. Market players are keeping a keen eye on the Federal Reserve to see what the central bank does next, with indicators suggesting there’s a high likelihood rates will remain unchanged this month.
By November, there’s an even split in market sentiment about a potential rate hike. Nevertheless, Garner is bullish on gold while noting that if bearish momentum grows the precious metal could dip.
Gold has historically been a hedge against inflation and has been considered a safe asset for thousands of years. The precious metal has, for example, seen an impressive 35% annual return from 1973 to 1979, when average annual inflation in the U.S. was around 8.8%.
To some Bitcoin proponents, BTC is a form of digital gold that can be used to store value and hedge against inflation. Both BTC and gold have a limited supply, are durable, and portable, with the flagship cryptocurrency having the added advantage of being easily divisible, making it easier to transact with it.
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