Commodity Trade Mantra

Posts Tagged ‘Investment Demand for Gold’

More Surprises ahead with Implications for Gold Price Volatility

What many Western investors fail to realise is that investment demand for gold knows no borders. It will be the growth in physical demand for gold from India & China that drives gold prices to unheard of heights over the coming years. Political & social developments, growth in middle classes with investible incomes in these countries will be more important than who’s occupying the White House.

Shorts Savage Gold Futures After a Hawkish Surprise by the Fed

American gold futures speculators just savaged gold again on their historically-wrong and irrational belief that Fed rate hikes will decimate gold. Last week’s surprisingly-hawkish FOMC statement unleashed furious gold futures selling, battering gold back below its new uptrend’s support line. Futures shorting soon reverses, as those positions must soon be covered.

Gold Price Correlation With Federal Funds Rates Since 1971

Everyone assumes higher interest rates will devastate zero-yielding gold, leaving it far less attractive. This premise led investors to avoid gold like the plague, and speculators to short sell it at wild record extremes. But provocatively, history proves gold price thrives in Fed-rate-hike cycles. Higher rates are actually bullish for gold.

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