Kitco analyst Neils Christensen made important evaluations about gold prices today. Let’s take a look at Christensen’s comments.

Week Ending with Frustration for Gold

Gold investors are ending another week of frustration as the precious metal failed to exceed $ 1,800.

Appreciating the Kentucky Derby, which will begin on May 1, I thought this horse analogy was appropriate: The gold market is standing in front of the door, a horse that does not want to run.

What makes the price action so frustrating is that the conditions are perfect for a boom rally. This week alone, President Joe Biden continued to push his infrastructure spending plan of nearly $ 2 trillion in his first address to Congress. It also launched a new $ 1.8 trillion plan to support families and children. The plan includes universal childcare and two free years in a community college.

Biden described his proposals as a once-in-a-lifetime investment opportunity. “For me, doing nothing is not an option,” Biden said.

Building New Paths

While the idea of ​​building new roads, improving internet service for Americans, and getting children out of poverty is noble task, this expenditure will lead to greater debt and deficits.

Biden said it would pay for its programs by increasing the corporate tax and increasing taxes on the rich to 39.6%. Economists have said that raising taxes could weigh on the US dollar, which would eliminate strong winds in the gold market.

So the US dollar seems to have weakened as government spending continues to rise, and in addition to this perfect storm, there is also the fact that interest rates will not go anywhere anytime soon. Prior to Biden’s speech to Congress, Federal Reserve Governor Jerome Powell said he was not ready to tighten monetary policy.

Economic Data

“It’s not the time to start talking about tightening reduction, Powell told reporters on Wednesday. We will inform the public in advance. It will take some time for us to see significant progress. We had a great job report. It is not enough to start talking about reduction. We will need to see more data. ”

Finally, while the US economic recovery is full of power, it comes at a significant cost. Inflation is on the rise and a looming threat to purchasing power for many.

To sum up, deficits are rising, the US dollar is expected to weaken, inflation is rising and interest rates will remain low. Gold is a purebred in this market but seems unable to find his legs. I just wanted to end with the words of an analyst I spoke to often:

“Gold does what it does best: It disappoints its investors.”

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