There’s more, as the fundamental picture is also arguing for a turn higher.
First off, there’s seasonality. Historically, June is typically one of the worst months for gold. I had thought that the tremendous liquidity being thrown at global economies would have overwhelmed this seasonal factor for gold this year, but apparently the need to digest those earlier gains put the metal firmly back into its seasonal pattern.
Second, some of the generous fiscal stimulus programs enacted immediately after the pandemic hit, most notably the rich unemployment benefits in the U.S., are scheduled to roll off at the end of July.
Rest assured, they’ll be extended, even if at a lower level. So this will shower more, ever-cheaper dollars onto the economy, and further support gold.
Finally, we’re seeing not so much a second wave of the pandemic but a resurgence of the first wave as economies open back up. The trend right now is disturbing — especially for those of us with young adult children returning to their social lives, as Covid is spreading like wildfire now that bars have reopened.
Once again, bad news on the pandemic front only encourages the Fed to ramp up their existing programs and invent new ones. I would not be surprised to see the central bank buying U.S. equities and joining the negative-interest-rate club if this trend continues.