Top Stories This Week: Gold Price Pushes Higher, Has the Metal Bottomed?

For the first time in awhile, it’s safe to say it’s been a week of clear upward momentum for gold. After starting the period around US$1,730 per ounce, the yellow metal was trading at about US$1,745 at the time of this writing on Friday (April 9) afternoon. 

Gold’s price increase came alongside the release of the US Federal Reserve’s latest meeting minutes on Wednesday (April 7). The central bank’s comments, which relate to its mid-March meeting, indicate that it remains committed to supporting the economy and currently has no plans to raise interest rates.

Moving opposite to gold, the US dollar and 10 year Treasury yields declined on the news from the Fed. Treasury yields reached a 2021 high of 1.745 percent at the end of March.

So does this turnaround mean the gold price has bottomed for the time being? Maybe.

According to David Erfle of Junior Miner Junky, the US$1,670 to US$1,690 level may have been gold’s low point. However, he also said a move down to the US$1,560 to US$1,580 range wouldn’t shock him.

“There’s a good chance (gold has) bottomed here around that US$1,670, US$1,690 level, but if it breaks that area of support, then the 50 percent Fibonacci retracement level of that move from US$1,045 to US$2,089 would be US$1,557” — David Erfle, Junior Miner Junky

Offering his perspective on where gold may be headed as the year continues, Ronald-Peter Stoeferle of Incrementum told me he thinks US$2,300 is still a possibility.

Although Q1 was rough for the yellow metal, he believes that at some point the Fed will introduce yield curve control. At that point, gold should start to go “significantly higher.”

“I think at some point the Federal Reserve will have to step in and introduce something like yield curve control. And this will be exactly the point in time when gold will start going significantly higher” — Ronald-Peter Stoeferle, Incrementum

Yield curve control is when the Fed targets a particular long-term interest rate, and then buys and sells bonds to hit that target. That’s in contrast to the central bank’s usual strategy of setting the federal funds rate, which is a short-term interest rate.

We’ll be posting my interview with Ronald-Peter next week, so stay tuned for that.

With gold’s future in mind, we asked our Twitter followers this week if they think the yellow metal has bottomed out for the year. By the time the poll closed, about 70 percent of respondents said they think that it has. But not everyone agrees — one commenter said they see a bottom at US$1,300, while another said they think US$1,560 to US$1,580 will be gold’s low point in 2021.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, we took a look this week at the Australian buy now, pay later sector, which has been attracting interest since the launch of Afterpay (ASX:APT) in 2015. After spending a short time as a private company, Afterpay listed on the ASX in 2016 has experienced a huge amount of momentum since then.

The buy now, pay later concept is simple — as the name suggests, it allows shoppers at participating retailers to buy and receive items immediately and pay for them in the future. Companies offer different payment plans, and typically do not charge interest.

“Buy now pay later arrangements allow consumers to buy and receive goods and services immediately from a merchant, and repay a buy now pay later provider over time” — Australian Securities & Investments Commission

This interesting space continues to offer opportunities for investors, with initial public offerings expected this year for Limepay and Beforepay. We’ll be keeping an eye out to see what comes next.

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there’s someone you’d like to see us interview, please send an email to cmcleod@investingnews.com.

And 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.