Gold Fundamental Outlook: Neutral
- Gold price upside momentum is sluggish since mid-April
- The history is between the u.s. dollar and government bond yields
- Focus then on the FOMC minutes, Powell, and the balance sheet
The price of gold spent most of this fits in with the week of trading with care more, but all in all, the precious metal has struggled to make significant progress to the upside since the middle of April. Risk aversion seems to play a key role in fundamental roll, over the past 5 trading sessions, and can probably continue to do so in advance. A source of concern, this will adapt to the week was the Fed Chairman, and Jerome Powell, to pour cold water on it depends on the quality and rate expectations of.
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That has pushed the S&P 500 index over the 2-year government bond yields struggle to find much progress to the upside. It continues to take account of prolonged economic uncertainty that may keep the Federal Reserve of the holding company, will always be on the current zero interest rate setting. The anti-fiat of the yellow metal, which is understandable, found a bit of support. With no inherent debt, gold may have difficulty in an environment where interest rates rise, and vice versa.
But also, strength in the port-linked US Dollar and can be worked in the gold of the favor, denying bullion its full potential as an anti-fiat assets. Given this, it seems reasonable to why the yellow metal has been on the rise since August see chart below. As the central bank reduces benchmark lending rates around the world had found itself in a relatively attractive environment. But are we going to continue?
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A downside risk for gold in the immediate sense, could be a surge in market volatility that allows investors to prioritize the preservation of capital. In this scenario, the U.S. Dollar could benefit, relative to the yellow metal. FOMC minutes and a speech by the President of the Federal reserve board Jerome Powell, two in advance. Lately, central bankers have been increasingly warning about the the long-term threat to growthundermine the quick, recovery make.
During this time, there have been increasing concerns regarding the UNITED states, trade with China relations tensions simmer. At the same time, the Federal reserve has undertaken extraordinary measures to lubricate and capital markets. Last week, in its balance sheet, it has increased by more than 3 weeks that he has launched efforts to buy corporate debt. But also, there is the same force that from the central bank at the beginning of the crisis, open market operations, that has been fading.
In the long term, which has led to a decline in yields across the world to work in gold’s favor, and that can maintain high prices despite the near-term noise. With this in mind, it is a private call for the weekly gold fundamental point of view.
( 00:05 GMT )
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— Written by Daniel Dubrovsky, a Currency Analyst to DailyFX.com
To contact Daniel use the comments section below, or @ddubrovskyFX on Twitter