Gold And Gold Stocks Ahead Of Earnings Reports

London (Oct 25)  Summary•Gold holds firm around $1250. Oil and U.S. dollar could offer conflicting catalysts.

•Earnings reports from gold miners start this week. Time to look closer at some names.

•There are many interesting stories this earnings season. I present some of them.

In my previous article on the topic, I wrote that gold (NYSE: GLD) did not have a big chance for a rebound until oil hit the wall somewhere in the $50 - $55 range. The rationale for this conclusion was gold's dependence on investment demand and the resulting necessity to watch various asset trends to see where the funds flowed.

The initial prerequisite for gold's rebound is there - oil rally stopped and black gold may even fall below the current support level.

However, there is one important factor that surely keeps gold prices from rising - the U.S. dollar (NYSE: UUP). Few people expect a Fed hike before the U.S. election, yet the market already evaluates the December meeting and finds a hike inevitable:

I believe that the strength of the U.S. dollar (and the U.S. stock market as well) is caused by the weakness of alternatives rather than by internal positive factors.

The dollar is just safer and more attractive than its counterparts - the Euro (Brexit, migrant crisis, disputes among members), the Japanese yen (no growth and negative inflation once again), the British pound (Brexit). In this situation, the dollar is free to rise further and possibly test the highs of 2015.

Source: SeekingAlpha