by Adam Hamilton
Gold’s recent weakness has dampened bullish sentiment, but the entire precious-metals complex has actually enjoyed record early-summer strength. The summer doldrums have always been a vexing time for gold, silver, and the stocks of their miners. Without any recurring seasonal demand surges in June and July, sideways-to-lower drifts are common in this seasonally-weakest time before big autumn rallies.
Traders’ sentiment, their collective greed and fear, drives nearly all short-term price action. Most of the time, sentiment is heavily influenced by expectations. If gold rallies 5% in a month where traders expected 10% gains, disappointment and bearishness will flare. But if gold rallies that same 5% when the outlook was for no gains, traders will grow excited and bullish. Performance versus expectations colors reality.