Gold price to shine in medium-term, watch out for signals that point to $2,400
Gold prices extended gains as investors increased bets that the US Federal Reserve is done raising interest rates.
Rick Bensignor, president of Bensignor Investment Strategies speaks to IGTV financial analyst Angeline Ong to explain why technical signals suggest that if certain levels are achieved, the next level for gold prices is around $2,400 per ounce.
(AI Video Summary)
Inflation decreasing
In this video, Rick Bensignor from Bensignor Investment Strategies talks about the recent changes in interest rate expectations and how they have affected the markets. He explains that the battle against inflation is still ongoing, but it's a good sign that inflation numbers are decreasing. This has caused a positive shift in the stock market, with prices going up.
Effect of interest rates increase
Bensignor also mentions that hedge funds have been betting against bonds for a while, but the recent increase in interest rates has hurt those trades. He believes that the sentiment has changed and expects the US 10-year Treasury yield to soon reach its highest point.
Impact of geopolitical risks and conflicts
When it comes to stocks, Bensignor thinks that the Dow Jones could break past their previous record highs. However, he warns that there are still geopolitical risks and conflicts that investors should be aware of, such as those between Russia and Ukraine, US-China politics, and issues in the Middle East. These risks shouldn't be overlooked even though there have been positive signs, like the recent CPI data.
Volatility index
Bensignor also mentions the volatility index (VIX), which measures how much protection option sellers are demanding. He explains that the VIX is not particularly low based on long-term trends, which indicates that there isn't much fear in the market right now. However, he suggests that it might be a good time to buy inexpensive protection, especially as the market approaches resistance levels. In other words, it could be a good idea to buy options that protect your investments when volatility is low.
The latest on gold
Lastly, Bensignor talks about gold and its recent price movements. While there has been some volatility, the medium-term outlook for gold has improved. He thinks that if interest rates drop below 4% on the US 10-year Treasury yield, it could cause gold to rise to new all-time highs. Bensignor even gives a target price of $2,450.00 if this happens. So, he believes that lower interest rates could be a win for gold investors.
In conclusion, Bensignor shares his insights on current market trends and advises cautious optimism. He reminds us to consider macro risks and to use options to protect our portfolios when necessary.
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