In the Buenos Aires bag, the papers corresponding to the mining companies climbed with force. What is behind it and whether or not it is time to bet on gold.
Wall Street rose on Wednesday after inflation data cooled further in Junewhich could motivate a brake on rate hikes by the Fed. This benefited the price of gold and therefore the paper linked to this sector. Thus, this day, the cedears of the miners shot up.
In that context, Hamony Gold rose 9.5%, Pan American Silver Corp rose 6.9%, while Barrick Gold rose 5.2%. The rise in these papers happens in tune with the rise in the price of the bullion. Spot gold rose 1.3% to $1,957.32, while US gold futures rose 1.3% to $1,961.70.
Traders said that signs of cooling inflation in the United States have fueled expectations that the Federal Reserve will stop its cycle of interest rate hikes sooner than previously thought. “Gold rose 10 dollars after knowing the CPI data, which was lower than expected, with the hope that the July rise will be the last of the cycle”said Tai Wong, an independent New York-based metals trader.
Cedears: is it time to invest in gold?
Mauro Mazza, the Head of Research at Bull Marketin dialogue with Ambitmaintained that “you always have to have positions in gold, it doesn’t matter if gold goes up or down, the reality is that having mining companies is like having gold on steroids. In the long term, a mining company is like being the Bitcoin of Gold, and more so if they are junior mining companies.”
As to whether gold is starting a bullish term cycle he said that “First we will see a shake out, a class asset margin call.”
“When the Fed starts lowering rates, it will not be synonymous with strength but with extreme weakness. With this rate level, gold is not a business, but they buy it because they believe that the Fed will lower the rate. The reality is different. The FED will lower the rate to the rate and level that gold demands, as long as something breaks in the market, if nothing breaks, the FED will not lower the rate to the level that gold demands. And this is important Gold in that sudden drop will first have a margin call, a crash for being the first to sell to cover guarantees, and only then will the price rally begin that will take us to maximums”Mazza revealed.
Finally, he said that both PAAS (Silver and Gold) and HMY (HARMONY) are actions to have in your portfolio. “Obviously the junior ones, these companies mentioned, are ideal for the post margin call, meanwhile what is recommended to wait for that moment is Barrick Gold (GOLD)considered a senior company in the sector,” he closed.
Source: Ambito
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