Commodity Trade Mantra

Posts Tagged ‘US Treasury Yields’

Dollar nowhere near Bottoming out, Gold nowhere near Topping out

Despite two rate hikes & impending balance sheet reduction, the 10-year yield has moved 15% lower since early March while USD has been weakening, both contrary to many forecasts. While USD has been falling, Gold has rallied over $200 since December 2015 to its current mark at 1,276.70. Now there are many potential catalysts to move make the 20%+ seen in Gold look small.

Stronger Demand & Weaker US Dollar To Push Gold Prices Higher

The peaking of US real yields and the downward pressure building on the US dollar are positives for gold prices. Meanwhile, we expect global jewellery demand & investor demand to pick up in line with the overall improvement in the global economy and in gold demand centres in particular. It would be the first time in five years that demand will be higher than supply.

Gold Prices Pullback, But Gold Bulls Have Nothing to Worry About

Gold prices have fallen from a $1,260 peak to just under $1,200 as rate-hike expectations have grown. Despite this, we think that gold prices have been relatively resilient as the dollar failed to rally substantially as a result of the behaviour in US real yields. In the short term, those who are long gold might not have to suffer too much more downside.

Gold and Silver - Lowest Risk, Highest Probability Investments in Today's World

If central banks are successful in reflating the global economy and inflation rises, gold and silver rise. If they are unsuccessful, global economy falters, but gold rises. The size of the moves that gold and silver can make will be dependent on which of the global outcomes will unfold in the next 6 to 12 months & beyond. Either way gold is the best beneficiary of each of them.

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.

Currency Devaluation Coming Soon To China

Keep your eye on the market & listen. The global trend in stock prices is still bullish. The market doesn’t yet see any reason to panic over these big picture forces that are playing out under the surface. We’re going through a mild correction but not enough to turn the market bearish. A Chinese currency devaluation might change that but it could still be a year or so away.

Petrodollar Death Means A Liquidity And Oil-Exporting Crisis On Deck

The Petrodollar, long serving as the US leverage to encourage & facilitate USD recycling in US-denominated assets by the Oil exporting nations & thus a means to steadily increase the nominal price of all USD-priced assets, just drove itself into irrelevance. As a consequence of a drop in oil prices, global market liquidity will fall.

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