Gold: temporary pullback before moving to $2100

5 August, 2020

Gold has broken above $2,000 and is trading as high as $2,035 but a temporary pullback is in the cards. Silver also continues its recent surge, as real yields dive deeper into negative territory. Both precious metals are set to consolidate around $1,900 and $23 respectively before moving to new highs, Bart Melek, head of commodity strategy at TD Securities briefs.

Fed signaling that it is weighing the abandoning of preemptive rate moves to curb inflation has many worrying that the US central bank will allow inflation to move above the historic target of 2%, driving real rates even lower. Yield suppression could very well be a target, even as fiscal policy becomes more simulative.

If the yield curve goes below zero, does the Fed then move the Fed funds subzero? This, plus the fact that gold has the highest convexity is perhaps why gold is rallying, despite breakevens falling today.

The near-term threat is disinflation, and higher real yields. Consolidation lower is still in the cards, as this is very much a retail speculative frenzy, with CTAs and specs both shedding length recently. Before gold moves above $2,100/oz and silver into new cyclical highs, it is likely these metals consolidate their gains near $1,900/oz and $23/oz first.


Source  
Majors guided by ECB decision today7 Mar, 2019  

The main thing the FX market is waiting for from the ECB is for it to revisit its forward guidance on rates - and, as this is unlikely to be touched...

Dollar drops and rebounds from 95.1022 Aug, 2018  

The decline in the index finds some respite near 95.10. US 10-year yields dropped to lows near the 2.81% handle. FOMC minutes next of relevance...

European stocks rally, eye 2-month high14 Mar, 2016  

Commodity producers and banking stocks advanced on Monday, pushing the European equities higher with regional benchmark eyeing 2-month high...


Negative rates, a tiered system and the ECB24 Feb, 2016  

Lasse Holboell Nielsen, Research Analyst at Goldman Sachs, suggests that the prospect of further cuts in central bank policy resulting in rates going deeper into negative territory has had an adverse impact on investor confidence in banks...

US and Euro area PMIs in focus today22 Jan, 2016  

Research Team at Danske Bank, suggests that the US and Eurozone PMI data will be the key economic releases for the day in addition to the UK retail sales data...

Oil hit lowest since 200318 Jan, 2016  

Oil prices fell to their lowest since 2003 in Asia as investors prepared for a rise in the Iranian exports after sanctions against the country were lifted over the weekend...


Bullish price-indicator crossover in GBP/USD25 Dec, 2015  

A bullish crossover between the GBP/USD current rate and its 200-hour SMA has been detected. The ascending GBP/USD price finds itself en route to the 800-SMA, which carries an equal resistance to the 200-SMA on 4hr charts...

World growth shrinking23 Dec, 2015  

Raoul Leering, Head of International Trade Research at ING Bank explained world trade volume shrank by 0.5% in October (month-on-month growth in volumes), according to the Netherlands Bureau for Economic Policy Analysis...

Bank of England rate decision preview10 Dec, 2015  

The GBP/USD pair is trading largely unchanged on the day around 1.5180 following a 180 pip rally on Wednesday. The immediate focus is now on the Bank of England (BOE) rate decision and minutes release...