In short, maybe. And here’s why.
When compared to other metals, gold prices have some discernible cyclical patterns.
In other words, there seems to be a correlation between gold price fluctuations and the stock market cycle.
To explain how it works, let’s refresh on what the market cycle refers to.
Simply put, it is the regular occurrence of upward and downward movements of general business activity in the global economy. And these ups and downs are regularly repeated with the passing of time.
Now, here’s a chart showing how gold prices seem to have been mimicking the market cycle’s patterns, between May 2020 and March 2021:
According to the chart, we would now be past the point of maximum financial risk and entering the phase of maximum financial opportunity.
Time will tell.
But in any case, the market cycle could act as a good indicator when building a gold investment strategy and possibly help improve returns on investment portfolios if the correlation proves accurate.
Last week, the bullion showed its biggest daily increase since March, with prices settling at their highest in seven weeks, above $1,760 per ounce.
The expected forecast? Bullish.