Comm: Precious

(New York)

Gold has been stuck in a bear market for a long time. However, it is getting close to completely breaking out of its funk, as the yellow metal is at a 6-year high. Gold is being driven by worries over the economy, falling yields, and a potentially weaker Dollar, as well as geopolitical fears. UBS summed up gold’s position this way, saying “[Due to the] declining cost of holding gold as rates remain low or continue to fall, gold’s appeal as a diversifier and alternative asset amid the current macro environment is increasing”.


FINSUM: Our only worry about gold is if rate cuts cause a risk-on move by investors that will leave gold in the dust.

(New York)

Gold is having a good year, up almost 10% after a very long bear market. But where might it be headed now that the Fed is likely going to start a cutting cycle? The answer is probably significantly higher. The macro backdrop is perfect for gold—geopolitical tensions are high, there are worries over the domestic and global economy, the Fed is going to be cutting (lower rates are better for zero-yielding gold), and the Dollar is likely to weaken, making gold cheaper for overseas buyers.


FINSUM: We agree all the ingredients are there, but if the Fed starts cutting, it may alleviate a lot of worries about the economy and make risk assets look more favorable.

(New York)

Gold just took the jobs report on the chin. As our readers will know, the US jobs report from Friday was nothing short of stellar, with the job creation numbers blowing away all expectations, and in doing so, lowering the odds and potential pace of Fed rate cuts. That led to a big sell-off in gold on Friday that followed an even larger one Monday. Gold lost almost 4% over just two days last week.


FINSUM: The jobs report simultaneously sapped gold of the fear boost it gets from worries about the economy, as well as the potential benefit of lower rates.

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