Higher crude oil prices are supporting gold and silver. Gold and silver have always flourished in an inflationary environment. Focus will shift to inflation. If crude oil prices continue to rise then one should use sharp dips to invest for the short term. I see a direct correlation between gold prices and crude oil prices. Trump’s South Korea visit and China visit will be closely watched. Ways to deal with North Korean nukes will affect gold and silver prices.
Rising crude oil prices can change the balance sheet of emerging markets like India. Governments will be caught between the choice of fiscal management and inflation management. Most of the emerging markets have enough reserves to withstand an energy shock. I see emerging market currency weakness, if Nymex crude oil continues to rise to $80 and consolidates at $80. Under the current scenario crude oil looks headed for $100 in the next twelve months as long as it trades over $46. Emerging market stock markets will form a medium term top and could move into a bearish phase if crude oil prices rise and consolidate around $80. As long as crude oil prices do not break $80, emerging markets are in a safe zone.
Historically crude oil prices have always zoomed under republicans. The current rise in crude oil price is an early signal of history repeating itself.
COMEX GOLD DECEMBER 2017 – current price $1280.10
Bullish over $1275.50 with $1291.40 and $1296.30 as price target.
Bearish below $1270.40 with $1264.60 and $1257.30 as price target.
This post was published at GoldSeek on 7 November 2017.