David Morgan, a renowned precious metal expert, recently published an article assessing the gold market. According to the article, while Morgan believes that gold could eventually make a significant move higher, he does not view the current situation as a breakout opportunity.
The article argues that gold prices have been trending higher for several weeks but that the move may be too quick to be considered a true breakout, and that it could be simply a “fake-out”—a brief spike in price that quickly fizzles out and fails to generate substantive gains.
Morgan expands on this argument by noting that the U.S. dollar index and other factors such as industrial demand for gold are not currently supporting gold’s rally. Furthermore, Morgan argues that the recent strength of gold price was mainly spurred by news coverage of the possible timeline for an American infrastructure bill. In particular, there has been speculation that the passage of a $2 trillion stimulus bill could significantly drive gold prices higher due to President Biden’s strong support for such legislation.
However, without economic momentum to drive gold prices, Morgan believes that the gold rally could be short-lived. He further reasons that a correction might follow a “fake-out,” and gold prices could continue to trend sideways. While Morgan does believe that gold prices could make a significant move higher over the long-term, he does not view the current market situation as the optimal opportunity to capitalize on this potential.
