(28 July 2020) Gold closed at a new all-time record high of $1944 today as the US dollar extended its precipitous decline.  Gold’s recent rally is largely the consequence of the falling greenback as the Covid-19 pandemic has forced the Federal Reserve to engage in an unprecedented QE policy of asset purchases.  QE (“quantitative easing”) is the more polite, 21st-century way of saying money-printing.

In order to avoid a collapse, the Fed buys trillions of dollars of government and corporate debt in order to entice institutional investors (e,g, hedge funds, investment banks) to move into riskier assets like stocks, thus keeping the stock market afloat despite deteriorating economic fundamentals.  But all these trillions of Fed-created dollars expand the money supply, and thereby cause the value of the dollar to decline.  Alas, not even Fed Chair Jay Powell can suspend the law of supply and demand.

The rally in gold is obviously welcome news for gold bugs who are keenly aware of the tendency of the dollar to lose value over time.  But now that real inflation-adjusted bond yields in the US are below zero, gold has become a more attractive asset to hold.  After all, if bonds no longer pay any interest, why not just own gold?

These recent gyrations in financial markets are a reflection of the uncertainty of the Covid crisis as governments do their upmost to prevent a full-blown depression.  An economic recovery is possible in the coming months, but without a vaccine any recovery will be partial at best. Meanwhile, unemployment and consumer spending will continue to fall well below pre-Covid levels and this will impact the corporate bottom line for months to come.

How high could gold go?  While it is difficult to make specific targets based on astrology alone, the planetary outlook is nonetheless bullish over the next several months.  Looking at the current transits against the gold natal chart, we can see why gold has reached a new high.  Using the 1919 gold chart (from the time of the first publicly quoted global price), there is a stunning alignment of planets that aspect the Sun-Venus conjunction in the natal chart.  Jupiter (26 Sagittarius) is key in this respect, as the bullish planet casts its full-strength 120-degree aspect on Venus (27 Leo) and the Sun (25 Leo).  Jupiter is usually a positive influence that boosts prices when it forms alignments with a significant natal planet.  In this case, it activates two natal planets at once, so that is one reason for the extra strength of the current rally.

In addition, we can see that the Jupiter influence gets a helping hand from the exact opposition from Neptune (26 Aquarius) and from the square with Venus (26 Taurus).   A basic astrological principle in this respect is that the more planets involved in the alignment, the more powerful it will be.

With the Fed meeting tomorrow (Wednesday), is it possible that gold goes higher, especially if Powell announces further easing thus depreciating the dollar even more?  Yes, although gold bulls should be aware that Jupiter is due to separate from its exact aspect starting next week.  It is quite possible that gold could move higher later this week as Mercury will align with Jupiter and the Sun-Venus conjunction.  Since this looks mostly bullish, a push above $2000 would not be surprising.

And yet the influence of Jupiter may diminish through the month of August so that could increase the odds of a significant pullback.   While it is possible we could see gold fall back to a key level of technical support such as 1700-1800, another move higher is likely in September.  Jupiter is due to conclude its retrograde cycle on September 13 when it will resume its normal forward motion.  Once it begins to move forward again in late September, it will closely align with the Sun-Venus conjunction.  This should correspond with another significant rally in gold, possibly to even higher highs by the time of the US election in November.

Weekly Market Forecast

US stocks continue to trade sideways here as Congress tries to hammer out its latest virus relief package.  With the FOMC meeting and the big tech earning reports on tap for the rest of the week, one would think we could get some large moves.  And yet there are no unambiguous planetary alignments this week that suggest a big move one way or the other.  Of course, we could still get a big move, but the planets do not present a clear picture.  Next week looks more bearish, however, as Mercury opposes Saturn and Mars forms a square with Jupiter.

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Photo: Greek gold coin of Alexander the Great minted during the reign of King Lysimachos, 297 BCE.