Top Stories This Week: Expert Calls When to Buy as Gold Falls, Uranium Sees Setbacks
It wasn’t an easy week for gold, which pulled back after last week’s run to nearly US$2,000 per ounce.
The yellow metal sank below the US$1,900 mark on Monday (April 25), and declined as low as US$1,873 on Wednesday (April 27). It was back to just below US$1,900 by the time of this writing on Friday (April 29) afternoon, but some experts think it could still drop further.
I had the chance to speak with Gareth Soloway of InTheMoneyStocks.com, who remains bullish on gold, but expects the precious metal to move down to US$1,825 to US$1,850 before breaking out much higher. While that might sound disheartening, Gareth sees this potential pullback as a “great opportunity” to accumulate more gold.
“My fear is that I do think you still have a little bit more downside in gold … but this (level) is going to be the best buying opportunity” — Gareth Soloway, InTheMoneyStocks.com
Gold was far from alone in its decline. Major indexes like the S&P 500 (INDEXSP:.INX) and the NASDAQ Composite (INDEXNASDAQ:.IXIC) extended losses that began last week, although they saw some recovery later in the period.
Gareth also shared his thoughts on these declines, highlighting a couple of key events. For one thing, earnings reported by subscription streaming service Netflix (NASDAQ:NFLX) “shocked the market,” leaving investors wary as they waited for other major companies to share their results.
For another, next week’s US Federal Reserve meeting is now in the spotlight, with expectations of a 50 basis point rate hike running high. While many of the commentators I’ve spoken with ultimately don’t expect the central bank to be able to curb inflation effectively, its actions are still very much in focus and can cause turmoil.
With the upcoming Fed meeting in mind, we asked our Twitter followers this week how much of a rate hike they think is coming. The poll was ongoing at the time of this recording, but most respondents agreed with the widespread 50 basis point prediction. Less than 10 percent think it will come in higher than that.
I want to finish up with a quick note on uranium, where a couple of recent events have caused some concern. First, after climbing steadily in the first few months of the year, the commodity has seen a fairly large pullback over the last two weeks or so, dropping from about US$64 per pound to around US$53.
Second, news hit mid-week that the Sprott Physical Uranium Trust’s (TSX:U.UN) application to list on the NYSE Arca has been rejected by the US Securities and Exchange Commission. A press release indicates the trust doesn’t meet the exchange’s listing standards due to its structure and the nature of the physical uranium market.
While lower prices and the Sprott trust’s roadblock have shaken some market participants, others are less concerned. Justin Huhn of Uranium Insider pointed out on Twitter that while the Sprott trust decision is “disappointing,” it’s clear that it doesn’t need a NYSE Arca listing to succeed.
I recently had a longer conversation with Justin about the uranium industry as a whole, and I recommend checking it out if you’d like to get a long-term perspective on the sector.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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