![]() ![]() If this shows an above-forecast reading, gold will most likely remain under pressure, further boosting the bearish argument. With the dollar recently bouncing back, all eyes will be on the US core PCE inflation print on Friday. But the short-term gold outlook continues to remain highly uncertain owing to the reasons stated above and very heavily influenced by central bank speeches and incoming data. We tend to favor the bullish gold argument in so far as the longer term is concerned. Still-high inflation around the world means fiat currency is continuing to lose value, and gold could prove to be a good hedge against rising prices. Gold proponents would argue that interest rates are near their peak and with signs that inflation is slowly heading back toward the target for most major economies, this should brighten the gold outlook. So, in the eyes of gold bears, why tie up capital in something that doesn't pay any interest or dividends, and cost money to store? Can Gold Rebound? Central bank heads on Wednesday made it clear once again that further tightening is required, and policy will need to remain contractionary longer as the decline in inflation has been frustratingly slow, and the economy is holding its own better than expected. So, gold opponents, arguing that yield-seeking investors would rather invest in government bonds and enjoy the fixed nominal return than hope for a bigger capital appreciation by holding gold, have sold the metal on every rally since. Just a couple of months ago, the market was pricing in Federal Reserve rate cuts as early as September as economic worries boosted speculation that inflation will fall rapidly. So, the downside risks could be limited for the precious metal moving forward. But after a slow two-month decline, gold is now near the key $1,900 support level, where we might start to see some bargain hunting again. Bond yields held firm, and this reduced the appeal of gold, silver, and yen, some of the lowest and zero-yielding assets. On Wednesday, investors assessed the main message coming from this week's Sintra conference - that more policy tightening is on the way - and decided to punish the metal further. Gold hit a fresh monthly low near $1,900 before bouncing back slightly on short-side profit-taking. ![]()
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