Commodity Trade Mantra

Posts Tagged ‘Real Interest Rates’

What Triggered a Meltdown in Gold and Silver Prices Last Week

The markets entered October with lots of traders still willing to hold out for higher prices as long as prices weren’t breaking down. Across the table sat the bullion banks, heavily short & pushing for gold and silver prices to fall. The impasse broke when the stronger dollar & higher rates pushed metals below technical support. Weak-handed speculators ran for the exits.

The New Gold and Silver Forecasts - Alternative Scenarios

The prospect of Fed rate hikes will weigh on gold and silver prices. As soon as Fed rate hikes for 2016 and 2017 are fully priced in, we expect gold and silver prices to rally again because of higher demand from investors. But if Trump becomes President and/or if investor sentiment deteriorates sharply, this would result in sharply higher gold and silver prices sooner.

Why One Analyst Believes Gold Prices Could Hit $3,000 an Ounce

We are likely entering a new gold bull market since the previous one concluded in September 2011. Since 1970, we’ve seen five gold bull markets, each one lasting an average 63 months and returning an average 385%, according to the WGC. Dr. Diego Parrilla stated that “a perfect storm for gold is brewing” & predicts gold could rise to $3,000 within the next three years.

Fed "Policy Error" Sparks "Best Fundamentals In Years" For Gold

As US inflation begins to re-emerge & monetary policy around it continues to remain accommodative, the potential for lower real interest rates is increasing. In our view, this could create similar dynamics for the gold market as what occurred in the mid-to-late 1970s. Gold investment appears to be moving towards stronger fundamentals than we have seen over the past few years.

What Drives the Price of Gold? Myths About Gold That Just Won’t Die

A number of gold’s fundamental price drivers are currently gold bullish or in the process of turning bullish, and others are not, or at least not yet. However, the great monetary experiment that central bankers have launched is certainly a very good reason not only to hold gold, but to actually overweight it relative to other assets – especially after it has already corrected quite a bit from its 2011 peak.

This is not 2008 – At least not for Gold Prices

Both, low energy prices & higher real interest rates are already reflected in the current gold prices. As longer-dated oil prices cannot remain below industry costs indefinitely, nor real interest rates rise much higher given a data dependent FED, this creates an asymmetry to gold prices, regardless of broader market normalization – or capitulation.

There Are Significant Risks To Goldman's Forecast For Gold Price Weakness

Goldman admitted that while its “base case is still for higher US real interest rates, lower gold”, it may be wrong adding that “while our base case remains for higher US real rates and lower gold prices, there are significant risks that our forecast for gold price weakness is pushed out, should the Fed surprise us and remain on hold in December.”

Will Gold Prices Finish 2015 with a Gain?

After its stellar performance last week, gold might do something it hasn’t done since 2012—that is, end the year in positive territory. It’s no mere coincidence that gold’s breakout coincides with the weakening of the U.S. dollar last week. The greenback signaled what’s known as a “death cross,” widely recognized as the start of a bearish trend.

An Insight into the Future Price of Gold

Real interest rates are one of the best predictors of the nominal dollar price of gold. When real interest rates are low (or negative), that gives gold a boost. When real interest rates are high, that puts downward pressure on gold. This easily understandable correlation is much stronger than other correlations such as the stock market or economic growth.

Real Interest Rates have a Real Influence on Gold

Does gold respond to the inflation or rather to the real interest rate? Paul Krugman said once that the reason behind the high real price of gold between 2001 & 2011 was low real interest rates, not the expected inflation. Is he right and are real interest rates really the main driver of the yellow metal price? How do they affect the gold market?

Deflation In Europe Is Just Beginning... And How To Trade It

Disinflation is just about to turn into outright Deflation in Europe. The ECB is active but most likely already late in the game, behind the curve, and unable to prevent deflation from kicking in. There are important consequences for rates and spreads in Europe, together with the level of the EUR itself.

Why The Gold Price Is Trend-less Currently

Clearly, investors/traders are looking at some signs of economic improvement but are also seeing geopolitical events & other factors which are making them second guess themselves & lose conviction as to which way things are going. There are two very important & opposing gold price drivers which we discuss in this article.

Goldman's 5 Key Questions For Janet Yellen

Fed Chair Janet Yellen is likely to stick to the script in her inaugural monetary policy testimony but Goldman looks for additional color on: 1) Recent patch of softer data 2) Fed’s thinking on EM weakness 3) Hurdle for stopping taper 4) Amount of slack in labor market 5) Future of forward guidance

follow us

markets snapshot


Market Quotes are powered by Investing.com India

live commodity prices


Commodities are powered by Investing.com India

our latest tweets

follow us on facebook