Direxion Shares Exchange Traded Fund Trust and gold are skyrocketing this week and investors are slightly worried that a correction might be lurking somewhere around the corner. Gold started this week on an impressive note after it jumped to a two-year high on Monday. The bullish rally in the bullion is finding momentum and support from fears that central banks in UK and the rest of Europe might embark on stimulus packages to save their economies.
The persuasive action of the Bank of England to encourage banks to give out loans is also fanning the flames of uncertainties in the global markets. More so, the consensus view is that the U.S. will delay raising interest rates – the minutes of the Fed June 14-15 minutes due today will confirm the position of the fed on interest rates.
The rally in gold is real; ignore the naysayers
U.S investors were not in the market on Monday because of the Independence Day holiday. Hence, many market watchers had expected the bullion and Direxion Shares Exchange Traded Fund Trust to fall back on Tuesday. Many people thought that U.S. investors will take profits off the table and that the profit taking would lead to a drop in the price of the yellow metal.
However, contrary to expectations, gold continued its bullish streak on Tuesday. The yellow metal booked gains as gold for August delivery settled with 1.5% gains at $1,358.70 an ounce. The Direxion Shares Exchange Traded Fund Trust gained a decent 6.20% to $153.78 after all major U.S. market indexes ended the session in losses.
Analysts are confident that the bullish momentum in the yellow metal is strong and that investors should expect more upside potential ahead. The market is still trying to fathom the impact of Brexit on the global economy. More so, the prevailing market sentiment is that the European Central Bank will drop hints about a new stimulus package today when the ECB president releases some comments.
Bob Haberkorn, senior market strategist at RJO Futures observed that the recent events in the global economic and geopolitical landscapes have created “the perfect storm” for an uptrend in the bullion and that “people are adding to positions.” Xiao Fu, head of commodity markets at BOCI Global Commodities says “We’re still quite optimistic towards the gold outlook, because Brexit means that global investors face protracted uncertainty.”
Gold soars with vigor on Wednesday, U.S. investors shouldn’t be late to the party
Interestingly, gold is soaring with vigor this morning in Asia and Europe. You can only hope that the party won’t be over by the time U.S. investors enter the market in the next couple of hours. This morning, gold is up by more than 1% after Asian stocks crashed without much of support in place.
Spot gold touched its highest point since March 2014 when it reached $1,371.40 an ounce earlier in the session. The yellow metal is still maintaining the gains as it trades up 0.9% to $1,367.20 an ounce by 0401GMT. Gold was August delivery was trading up 0.8% at $1,369.40 an ounce.
You’ll remember that the bullion crossed the $1,350 mark immediately after Britain voted to leave the EU. Helen Lau, an analyst at Argonaut Securities observes that “No one is able to understand how much risk is yet to be unraveled (from Brexit). That is an uncertainty that no one likes. This is what is driving gold prices higher.”