(Kitco News) – It has been an interesting week for the gold market, and while the price has seen a nice bounce off its recent 10-month low, there is still not a lot to celebrate for gold bulls.
We are ending the week with the precious metal holding support above $1,700 an ounce. But the market hasn’t able to gain any significant traction even as the U.S. government approved a $1.9 trillion dollar stimulus bill. The gold market was also rather blasé about the European Central Bank frontloading and increasing spending within its emergency asset purchase program.
Both of these situations should be extremely bullish for gold as they are inflationary, leading to further money printing. However, investors barely batted an eye at the looming currency debasement threat. Instead, they continue to focus on improving economic conditions. After signing the nearly $2 trillion stimulus bill, President Joe Biden announced that the government would purchase another 100 million vaccines. As a result of that, bond yields pushed to a new one-year high above 1.6%.
This new euphoria over the economic recovery could also be felt during the world’s biggest mining conference. This week the Prospectors & Developers Association of Canada (PDAC) held its annual mining conference, and because of the pandemic went virtual this year. Although there is optimism that gold will enjoy long-term fundamental support, the focus is shifting to metals with more near-term momentum.
Copper and other base metal associated with the development of green energy is attracting a lot of attention. Many analysts expect that this sector will attract more investment capital compared to gold.
Although gold has lost a bit of shine lately, the game is not completely over for the precious metal. Some big hitters have come out this week to support the yellow metal.
Mark Bristow, CEO of Barrick Gold, the second-largest gold producer in the world, said in a presentation during the PDAC that he sees another price spike coming.
“It is similar to post-2008, where the market wished everything would go back to normal but didn’t know the full damage yet. The liquidity that was provided between 2009-11 was caught in the banks. This time around, it arrived at the market,” Bristow said.
The recent price action in gold also attracted the attention of the bond king himself. In a webinar presentation, DoubleLine CEO Jeffrey Gundlach said that gold could be ready for a bounce as its recent selloff has been “powerful.”
“Long-term gold is pretty interesting. Our model shows that gold is at fair value at $1,761,” he said. “We don’t think the decline in gold is likely to continue.”
Peter Grosskopf, CEO of Sprott Inc., said this week that he sees real value in the precious metals space, and it’s only a matter of time before inflation pushes gold prices higher.