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Are gold prices bottoming out?

Much has been made of the sell-off in gold across the past month, with analysts pointing to more certain economic conditions. They suggest that gold has fallen due to several promising COVID-19 vaccines and a resolution to the US election.

However, gold has shown greater correlation to policy settings rather than economic uncertainty and the settings that have caused gold to rally across the past several years remain in place.

Note the correlation of gold prices to US inflation link bonds:

Gold prices had a rare divergence from this indicator across the past month, but it now appears to be returning to this correlation once more.

We believe that the current selling in gold will be very short-lived and that it presents a fantastic investment opportunity.

Find out more about Emerald Financial’s new Gold Portfolio and how to position yourself towards the gold sector by clicking here.

Sam Green

Sam Green is the Portfolio Manager at Emerald Financial, whilst also being an Equities and Derivatives expert for his clients at TradersCircle.

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