By Sean Brodrick
Resource Strategist / Investment U
Gold got goosed two weeks in a row. Last week it shot up $39 an ounce. That came on the heels of a $24 move the previous week. Could gold go higher from here?
Yes.
I’ll show you why.
Blame the Fed
Last week, the Fed signaled that it would stick with a near-zero interest rate policy for a good, long time. This means the Fed will likely continue to keep rates lower despite strong signs that inflation could be around the corner. This disappointed some traders (mostly gold bears) who thought the Fed would start to “normalize” its interest rate policy.
And so that provided the spark for gold’s $39 move. But many forget that gold moved the week before the Fed announcement as well. So why’d that happen? The reason is counterintuitive. It’s because sentiment got incredibly bearish.