Goodbye, Gold: Here’s Why the Rally is Over by Greg Guenthner
Gold futures are quietly sinking below $1,170 this morning.
The Midas Metal is breaking down. Now it runs the risk of coughing up every ounce of its comeback rally.
The damage has been swift and brutal. Gold is now 14% off its summer peak. We watched precious metals and miners vault to two-year highs just a few months ago as the Fed backed off a summer rate hike and world markets shook in fear of the Brexit vote.
But gold’s trajectory changed dramatically during the third quarter. While the major averages chopped along, gold couldn’t attract any attention. By the time the dust settled, gold had dropped toward 4-month lows.
Now gold finds itself on the brink once again…
“Gold has suffered its worst month since mid-2013, as the election of Donald Trump, the rising dollar and increased expectations of a US rate rise combined to send prices down 8.1% in November,” The Financial Times reports. “The fall to $1,173.20 per troy ounce marked the steepest monthly sell-off since June 2013, when the precious metal lost 11% in the wake of the so-called taper tantrum. November’s sell-off saw gold’s year-to-date gains trimmed to 10.7%.”
As it turns out, a tumultuous election season turned into a last ditch effort to drum up gold buyers.
It was a different world when we last updated you on gold in early November. We were days away from Hillary Clinton decisively winning the presidential election. The S&P 500 had just logged a six-day losing streak. The Dow had shed more than 100 points. And the Greenback was retreating, capping off a rally that propelled the U.S. Dollar Index to seven-month highs.
That’s when everything changed.
Just a month later, Trump is the president-elect. The S&P 500 rests near its all-time highs after a historic run. And the Dollar Index is hitting levels we haven’t seen since 2003.