Gold Has Explosive Potential - Gundlach
(Kitco News) - Famed hedge fund manager and“bond king of Wall Street” Jeffrey Gundlach continues to be bullish on gold,reiterating his call that when the market breaks above through criticalresistance at $1,360 an ounce, gold will push $1,000 higher.
According to recent Reuersarticle, Gundlach presented his bullish case for gold Tuesday at an event forDoubleLine clients. He also said that he is bearish on U.S. Treasury bonds.
U.S. government bonds “are notattractive,” he said.
Looking at classical technicalgold charts, Gundlach said that “something big is happening.” He added that themarket has “explosive potential energy” as it continues to build a strong base.
“Gold is maintaining an upwardpattern above its rising 200-day moving average, which is extremely good,” hesaid. “I’m not predicting it....I’m letting the market prove itself.”
Gundlach’s comments on gold comeas the market tests the bottom end of its near-term range as prices trade neara one-month low. June gold futures last traded at $1,323.10 an ounce.
While Gundlach’s is bullish ongold, he is just as bearish on U.S. Treasuries. He said that 10-year bondyields can continue to move higher. His comments came a day before the yieldsbriefly pushed past 3% for the first time since 2014.
Positive for gold investors, higherbond yields might not have a major impact on gold prices as some analysts mightexpect. During his presentation, Gundlach said that rising inflation pressureswill put pressure on government bonds.
Gold as a non-yielding asset doeswell in an environment where real interest rates are negative, which happenswhen inflation rises above bond yields.
Gundlach’s comments on gold andU.S. bonds came a day after his presentation at the Sohn Investment Conference,where he recommended buying the SPDR S&P Oil & Gas Exploration &Production ETF (NYSE: XOP) and shorting Facebook.
He said at the Sohn conferencethat he is bullish on commodities as inflation rises. He noted that inflationtraditionally rises into a recession.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.