This is not the first time gold has been the leader amid a seasonal and technical rally in the commodity space.
Ecuador turning a large part as Lundin plots big gold mine
Mining entrepreneur Lukas Lundin has a well-earned reputation for succeeding in places where others refuse to tread. Even, it seems, Ecuador.
For yesteryear five years, it has usually occurred around this time – the very first quarter – but has often been consult quick reversal in Q2.
However, when the long-term record is an accurate guide, the current gold price recovery could prove to become more of a cyclical – and for that reason sustainable move – as opposed to what is happening in the recent past.
“From a macro/technical perspective, we feel that the recent recovery in gold might be signalling an inflection point and also the potential beginning of a late cycle re-inflation phase,” TD Securities analyst Chris Dutton told clients.
He noted that a key precondition for starting off re-inflation cycles of history, plus a shift in investor sentiment from disinflation toward rising inflation expectations, has been a collapse and bottoming in oil prices.
Dutton noticed that oil’s dramatic declines in 1981, 1992-1993, 1997-1998, 2002, 2006, 2008, and 2014-2015 were all disinflationary at first. However, when the year-over-year alternation in oil prices starts to rise (from the decline of fifty per cent more often than not), the analyst believes a disinflation low is made.
“Gold prices almost always move higher awaiting this quite simple re-inflationary math,” he said, adding that in periods of re-inflation, gold stocks usually outperform the valuable metal itself.