VIDEO - Adrian Day: Fed Talk is Hurting Gold, Action Should Bring Price Relief

Gold has disappointed in 2021, and Adrian Day of Adrian Day Asset Management sees three reasons why the yellow metal hasn’t responded to factors like money printing and inflation. 

First, he told the Investing News Network, there’s the fact that it had a big run last year — he believes the market is still seeing consolidation after that major price move.

For another thing, the stock market is still going up. He explained, “There’s a lot of other things that are doing well … I don’t think you’re seeing a lot of people specifically say, ‘I’m going to sell gold and buy bitcoin,’ or ‘I am going to sell my gold and buy a house’ — you’re not seeing that.”

But, added Day, there are always reasons for people to sell, and they don’t feel a rush to buy.

Finally, there’s the ongoing talk from the US Federal Reserve about tapering and rate hikes. “My point is that the constant talk about tapering … that is a big ball and chain — a big anchor — on gold,” he said.

While those elements have been weighing on the gold price, Day does see an end in sight. He said although talk from the Fed about tapering and increasing interest rates has put a damper on price gains, once the central bank actually acts the situation should change.

Why? Day noted that the last three times the Fed has started tightening there was a similar pattern. “When they start talking about it gold goes down, and it’ll go down for six or eight months while they’re talking about it. But as soon as they start either raising rates or tapering, gold bottoms and turns around,” he said, noting that the market then realizes the central bank’s efforts aren’t enough.

“Gold investors should not be worried about tapering — we should be worried about the Fed talking about doing it,” he explained in the interview.

Watch the video above for more from Day on gold, as well as what’s going on in the gold market, including the recently announced merger between Agnico Eagle Mines (TSX:AEM,NYSE:AEM) and Kirkland Lake Gold (TSX:K,NYSE:KL,ASX:KLA).

Don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.