Gold has been one of the worst performing sector in July what happened?
There are several factors at play
- All the metal conglomerate is under pressure from the potential trade war spill over.
- June /July are typically weak month for gold and precious metals due to the North Hemisphere summer holidays
- US Dollar strength (now in doubt as President Trump is looking into currency manipulation – specially the Yuan dropped like a stone).
- Temporary subdued perceived geopolitical crisis ( I say subdued as satellites show an expansion of North Korea missile program structures and the new Iranian sanctions are due on 4th November).
- The market has been so good that gold, the classic counter trade, fell. Be wary, crowded trades never worked the last two years.
So – weakness, but not uncommon. Interestingly gold miners are at one of the cheapest level in respect to gold price.
A similar theory applies to all precious metal sector.
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