Real interest rates remain firmly in negative territory, a fact that continues to augur well for gold prices

The gold price support on Tuesday morning as investors shifted funds into equities on the hope that the stock market’s recent correction is over. The price of gold support at 19.38 to $1,766.30 per ounce and now trades $48 lower than its record high of $1,815 per ounce, posted on August 11. Weakness in the U.S. dollar, which fell against the euro and Australian dollar, failed to bolster gold this morning. Oil climbed 0.3% to $85.66 per barrel while silver advanced $0.17 to $39.27 per ounce.

With equities undergoing quite the rollercoaster ride, U.S. Treasuries continued to serve as one the primary safe havens alongside investments tied to the gold price. The ten-year yield tumbled from 2.56% to as low as 2.09%, its lowest level since December 2008. Real interest rates remain firmly in negative territory, a fact that continues to augur well for gold prices.

Bill Fleckenstein, a prominent investor and long-time bull on the gold price, summed up the bond market’s movements by writing on Minyanville.com that “The perverse fact of the matter is, it doesn’t seem to matter how out of control your government is, if you have a printing press, your debt is sought after. Look at Japan and look at us (the United States). Some day that won’t be the case, but for now the explanation is that, in the short run, people just want to get their colored paper back, even if it is slowly going to disintegrate over time.”

Steven Harris, analyst with Macquarie Capital Markets, highlighted last week’s Federal Open Market Committee meeting as a positive catalyst for the broader equity markets, as well as for gold and investments tied to the gold price.


Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

Gold Price Futures (GC) Technical Analysis – Trader Reaction to Minor 50% Level at $1954.80 Sets the Tone

Image
  Gold futures closed lower on Thursday but up from its low of the session as investors battled a number of factors including U.S. economic data and outside market influences. Earlier in the session, gold fell over 1%, as positive economic data elevated hopes for a quick recovery while dampening the investment appeal of the precious metal. On Thursday, December Comex gold futures settled at $1937.40, down $11.60 or -0.60%. On the data front, a drop in U.S. jobless claims reported Thursday and positive manufacturing data reported earlier in the week are taking some shine off gold. A weaker Euro is also weighing on dollar-denominated gold by driving up thU.S. Dollar Index. U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market because the drop largely reflected a change in the methodology used to address seasonal fluctuations in data. Earlier in the week, a report s
Read more

India, not Trump, is the real reason behind the crash in gold prices

Image
If you have been puzzled about the crash in gold prices after Donald Trump's election, you are in the company of almost every analyst and media outlet in the western world. Gold and silver are a major part of the research at The Arora Report. A combination of our proven precious metal algorithms, extensive resources and knowledge of the emerging markets led us to alert subscribers to The Arora Report early that gold was about to crash and the reason behind it. Immediately after the election, the net position of The Arora Report in gold, silver and miners has been short as part of a sophisticated strategy.
Read more