According to Bloomberg Intelligence (BI), which believes that the U.S. dollar will head down soon and trigger a long-awaited rebound in the precious metal.
“Metals will have a hard time recovering if the dollar rally resumes, but we don’t see that happening,” BI senior commodity strategist Mike McGlone wrote in the Bloomberg commodity outlook for October. “It’s unlikely the dollar can sustain itself above the 14-year high. Risk vs. reward appears to favor metals’ longs at current levels.”
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Bloomberg Intelligence is seeing signs that markets are looking at “an unfavorable greenback end-game,” adding that gold’s current upside potential outweighs its downside risks.
From a technical perspective, gold could only decline below its solid support level of $1,120 an ounce if there is a sustainable U.S. dollar rally combined with a strong stock market.
On the other hand, steady resistance level for gold is $1,375 an ounce — which was the metal’s high during the Federal Reserve’s latest tightening cycle.
Overall, Bloomberg Intelligence doesn’t rule out a move towards $1,400 for gold in the near future.
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