Gold breaking out with bigger rally ahead – analyst

The gold rally is expected to continue with prices for the precious metal likely to grow in the near term, predicts publisher of the Bear Traps Report, Larry McDonald.

After last week’s surge, the gold market extended gains on Monday to reach its highest level in five weeks before retreating slightly over the last two days. McDonald told CNBC that the rally can go on, as the “perfect storm” of rising gold prices is coming up. Gold has rallied more than 3.5 percent this year.

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© Michael Buholzer

Though low interests rates are good for gold, and the Fed raised them last week, it did not show the hawks expected by the market. The turbulence around the US political situation and a possible trade war with China can also send gold prices higher, McDonald said.

The analyst also noted that shares in some gold mining companies are cheap at the moment, and investors could cash in, adding to the momentum.

Another analyst, Chief Executive Officer of US Global Investors Frank Holmes, has said that gold is heading to $ 1,500 this year from the current $ 1,340-$ 1,350 levels.

“Inflation could be growing a lot faster than what the government is telling us. No matter which gauge you look at… inflation is trending up,” he told Marketwatch. Gold is often used as a hedge against inflation.

A weaker dollar would also contribute to gold prices, according to Holmes. “Americans like to hear that the dollar is strong, but a weak dollar makes American exports and tourism rock, not to mention gold prices go up,” he said.

Singapore’s BullionStar precious metals expert Ronan Manly told RT that global central banks have been suppressing gold prices for decades.

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