Gold prices in US dollars and stocks are both overbought and traders can expect a correction in the short to medium term, according to Phil Streible, senior market strategist at Blue Line Futures.
“I just think it’s overvalued at this point. There are approximately 311 companies that have recently entered this state of distress. Bankruptcy levels are increasing. I’m pretty bearish on US stocks, “Streible told Kitco News. “As soon as [the NASDAQ] breaks down a bit, there’s going to be a quick run to the door. I think the S&P 500 should be around 2,500. ”
Gold prices should test the level of $ 1,666 an ounce lower and if this floor is broken, the trend could become bearish.
“The gold has really stopped. If you look at this chart, it was over $ 1,750 at the close, I thought we were going to go back to $ 1,780, we just didn’t do it, we started to slide. So if you look, there is this bearish pattern, we have to break this downward trend, “he said. “I really think that gold will not be this great asset.”
In the United States, the stimulus measures have largely been integrated into gold since the Federal Reserve has already “ invested everything ”, noted Streible, other countries are about to do the same and therefore gold could see an appreciation in the price against foreign currencies.
“I think gold futures will not be as robust as they once were [in U.S. dollar terms], but if you look at gold against the euro, right now it is 1,575, the absolute record gold in euros is 1,625. I think it’s your game, gold against the euro will continue to climb, “he said.
The stock markets really ignore the extent of the damage the economy has suffered as a result of the pandemic, said Streible.
“It is very easy to destroy an economy, but it is very difficult to rebuild an economy. Many of these lost jobs will not come back, “he said, adding that consumer discretionary spending will likely remain weak until December.
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