Gold Price Flirts with US$1,700 Floor as Investors Pile into Stock Markets

Gold Price Flirts with US$1,700 Floor as Investors Pile into Stock Markets

It was a glum day of trade for gold overnight in US markets.

After sinking as low as US$1,704.1, futures for the yellow metal closed at US$1,705.6. Down 1.7% for the session.

It is the first time in a fortnight that gold looks set to relinquish this key level.

We’ll just have to wait and see what the market has instore for us tonight…

Appetite for risk growing

The reason for gold’s poor showing has to do with investor sentiment. Namely, the fact that we’re seeing people rush into stocks at the moment.

Wall Street, with the NASDAQ in particular, are leading a fresh charge. Brimming with activity and a desire for riskier assets.

Optimism, it would seem, is the order of the day.

No doubt, ongoing progress to revert pandemic restrictions is fuelling hopes. Especially as the US gears up for their iconic 4 July holiday.

Whether or not it is warranted though, is the ultimate question.

It is certainly looking likely that we may be through the worst of this pandemic.

At least for much of the West. South America is a new, emerging concern as the virus has gripped the continent.

However, even if the US, Australia, and much of Europe is on the road to recovery, it won’t be quick.

Economies all around the world are going to need time to recuperate. Even if many are still hoping for that elusive ‘V-shaped’ recovery.

Plus, we can’t ignore the political and trade disputes still floating about as well.

China is getting bolder by the day. If tensions between the US or Australia boil over, it will wreak havoc on markets.

Suffice to say, investors may need to take all this optimism with a grain of salt.

Fork in the road

Simply put, it seems as though we’re coming to a crossroads. The moment where markets will stop trading sideways and either take-off or tune out.

As of right now, all signs are pointing to the former. With stock markets gearing up for what may be another momentous bull run.

But there is still the possibility it could flip the other way.

In fact, our resident editor here at The Daily Reckoning Australia — Shae Russell — has outlined why the worst may be yet to come. Her Pandemic Roadmap outlines why more pain may be on the way for share markets.

So, before you dive into stocks, I urge you to at least give it a read. You can get your copy, for free, right here.

It doesn’t always pay to be a contrarian, but now might be a good time to consider it.


Ryan Clarkson-Ledward,
For The Daily Reckoning Australia