Next gold bull run or just the usual bull…?

 

Is it the right time to get back on the gold buying band wagon? Gold fell to a five year low late July but started showing short term bullish sentiment since early August. Although the market sentiment is still overwhelmingly bearish, some traders would suggest that when the market says sell you start buying. At least for short term investors, there may be some bullish moves left for a quick buck.

China- where it matters.

China recently devalued their currency by 2% causing a ripple affect and pulling other Asian currencies down with it. China being the world’s biggest buyer of the shiny metal and with most investors very comfortable putting their hands in their pockets and filling up their jars with gold; makes what they do matter. To top it off, China’s central bank released news that they increased their gold holdings by close to 19 metric tons. Bang.

Closer to home, investors have already reacted to speculation by FED officials that an interest rate hike could happen as early as September, whilst the most recent bullish sentiment is now speculating based on China’s move and poor US economic data; an interest rate hike at this point would be unlikely to happen.

So gold then sits somewhere in the middle. A stronger dollar makes buying gold more expensive, however; slowing growth in China by devaluating the Yuan keeping China competitive in their key export markets and Beijing motivated to reinvigorate the Yuan with spending at home; could lead to more investors turning to Gold for relief.

Just another day in the markets. Your call. Image thanks to Pixabay