David Morgan, the silver guru, is wondering whether the recent surge in gold prices indicates a lasting breakout or a fake out. As of late, there have been increased investment flows into gold, pushing prices up to their highest level since 2013. Prices rose by nearly 1.75% in August alone.
To answer Morgan’s question, it’s important to consider both the macroeconomic factors influencing gold prices and the gold market’s historical trend. Macroeconomic factors like trade tensions, political unrest, rising inflation, and an uncertain dollar all contribute to increased demand for gold, as investors seek a safe haven for their savings. Historically, the gold market is cyclical, with prices oscillating between periods of incrementally increasing and declining values.
All of this taken into consideration, the current gold prices appear to be indicative of a long-term breakout. In particular, the momentum generated in August signals potential support for the upward trend, with each consecutive month of higher prices increasing the likelihood of a sustainable breakout. There are no guarantees, of course, but with a weakened dollar, increased global tariffs, and inflationary pressure, gold looks set to remain relatively strong over the medium to long term.
At the same time, shrewd investors should be prepared for short-term deviations from gold’s long-term trend. Fake outs, corrections, and other market movements can be expected at any time, so investors should be patient and disciplined when dealing with gold.
So, to answer David Morgan’s question: yes, it appears that this is indeed a gold price breakout. Whether it’s a lasting one or not remains to be seen, but given the current macroeconomic environment and the lengthy stretch of rising gold prices, it seems to be on the right track.