Should We Be Looking At Gold?

This boils down to personal preference.

I'm typically not a fan of gold ($GOLD). Despite all the media reports of the runaway inflation that we should be expecting, inflation has stabilized and gold has been unable to outperform the S&P 500. We've had high volatility ($VIX), which suggests a lot of fear. And fear is one ingredient required to stimulate gold prices. But again, there's been little relative strength in gold the past few years. Check this chart out:

Enter Gold ($GOLD):

You can see that gold started off the year quite strong as the bear market unfolded on the S&P 500. But by March, gold reached its absolute price high for 2022 and by June, the relative high was in. Gold was mostly choppy over the second half of the year - until the U.S. Dollar ($USD) finally rolled over. Gold, which generally trades inversely to the dollar, benefited and, on Tuesday, we saw gold clear $1825 per ounce for the first time since June. I believe the key for gold in 2023 will be the direction of the dollar. If the downtrend in the dollar that began three months ago continues, then gold should perform well. Unfortunately, it doesn't mean that it'll perform better than the S&P 500. I believe that we remain in a long-term, or secular, bull market, so I personally would stick with U.S. equities. I'll talk more about this on Saturday at MarketVision 2023.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.