According to several of the leading analysts of the gold market, the future continues to look bright for the yellow metal.
After a strong rally to end the week on Friday, the spot gold price held above $1,350/oz on Monday—a full $300 per ounce (28.5%) above where prices started the year. Understandably, some gold bears have interpreted this rapid ascension to mean that market is topping out. It's undoubtedly been a performance that far exceeds expectations through the first half of 2016. Still, the majority of signs continue to point toward more gains ahead.
Earlier last month, the gold market did indeed take a breather after surging to an annual high above $1,370/oz. Although this was not especially surprising, it prompted many so-called experts to declare a painful correction was in store for gold.
Well, it seems that this correction was very short-lived. Gold analyst Jordan Roy-Byrne clarified that the markets were actually just retesting the lows from the upward surge to kick off the summer months. This retest was probably inevitable given that gold prices zoomed past their 2014 highs in a relatively short time span. Roy-Byrne goes on to lash out against these knee-jerk reactions, pointing out that the gold market "mostly ignored the moronic, empty drivel emanating from these supposed geniuses."
One of the many experts who had egg on their face for calling for the gold market's demise was Bernard Dahdah, a French analyst for an investment bank called Natixis. Dahdah (pictured, left) gained notoriety for correctly forecasting gold's bear market during 2015. He was recognized by the London Bullion Market Association (LBMA) for nailing last year's average gold price on the nose at $1,160/oz.
However, Dahdah maintained a bearish outlook for the yellow metal this year. He's been forced to eat his words with the dramatic and consistent rise of the market. To his credit, Dahdah has revised his outlook to a much more bullish stance, predicting that gold will touch as high as $1,400/oz at some point this year. He now cites uncertainty over the looming Brexit negotiations and a far lower likelihood of rate hikes from the Fed as reasons to be optimistic about gold going forward.
Some Left Behind
Despite the general rising tide of the gold market, the gains have not necessarily been spread evenly across the board for all gold mining companies. While the two largest gold miners, Barrick Gold (ABX) and Newmont Mining (NEM), have each seen an impressive 2016 performance thanks to the higher gold price, another stalwart, Canadian firm Goldcorp (GG) has actually seen its value drop about 2.5% over the course of July. This is just one example of how mining stocks are more unpredictable and more volatile than the underlying price of gold, making it a safer prospect to hold physical gold bullion than shares of gold stocks.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.