Gold Price Dives To 4 Month Low On Concerns

1. Gold Price Dives To 4-month Low
On Concerns Of Early Fed Tapering
:Aug 9, 2021

2. Points To Be Discussed Today:
• Gold Extended Its Slump
• Gold Are Losing Their Luster On Taper Expectations
• The US Labor Department
• Gold Selling Off Into The Close
• Gold Has Been Losing Ground
• Inflation Could Mean Short-term Volatility
• Gold Price Rallies As Bond Yields, Dollar Retreat

3. Gold Extended Its Slump
• Gold extended its slump after a stronger-than-
expected US jobs report last week fueled bets
that the Federal Reserve may start paring back
its massive monetary stimulus soon.
• Spot gold fell by as much as 4.4% during the
early hours of Asian trading, but clawed back
to recover about half of those losses once
markets opened in New York.

4. Gold Are Losing Their Luster On Taper
Expectations

5. The US Labor Department
• Data released by the US Labor Department on
Friday showed employers hired the most
workers in nearly a year in July and continued
to raise wages.
• That underscored remarks by Fed officials
suggesting a sooner-than-anticipated rollback
of the pandemic era stimulus on the back of a
solid labour market recovery.

6. Gold Selling Off Into The Close
• The jobs data “beat expectations by a
mile last week, which led to both gold
and silver selling off into the close.
• This morning we are seeing the overhang
of that as perhaps those traders a bit late
to the party are panic-selling the open,”.

7. A Volatile Open To Start The Week
• John Feeney, business development
manager at Guardian Vaults, said in
a Bloomberg interview, adding:
• “With low liquidity at this time of the
week combining with a large number of
stop losses being triggered we have seen
a volatile open to start the week.”

8. The Technical Picture Does Not Look
Good For Gold
• The technical picture does not look good for
gold and short-term negativity is likely to
continue, Harshal Barot, a senior research
consultant for South Asia at Metals Focus, told
Reuters.
• However, “the pandemic is not truly behind
us… There will be investors who will be
looking for these levels to buy up gold as a
protection,” Barot added.

9. Gold’s Appeal As An Inflation Hedge
• The jobs data helped lift the benchmark
US 10-year treasury yields in the process,
hurting gold’s appeal as an inflation
hedge.
• Meanwhile, the dollar index also hit a
two-week high on Monday, pulling
investors towards the greenback.

10. Gold Is Approaching A Major Support
Area

11. Gold Has Been Losing Ground
• Gold has been losing ground on investor
concern that an improving US economy and
rising inflation will spur the Fed to pull back on
unprecedented economic support.
• Low rates help make bullion more competitive
against assets that offer yields, while the
strengthening dollar and record equity
markets are also curbing demand for the
haven metal.

12. Inflation Could Mean Short-term
Volatility : 10 Aug 2021
• Lion Selection Group fund manager Hedley Widdup
thinks that inflation will be a key driver going forwards.
• “Historically the fundamental gold has been most
strongly influenced by is real interest rates,” he said.
• “Bond rates spiked earlier this year which sent a
shudder through the gold market because traditionally
the bond market has been a bellwether for the
intersecting outlook for official rates, economic
strength and all the metrics that fall off those –
currencies, equity prices, etc.

13. Inflation Could Mean Short-term
Volatility - I
• “So, the bond rate spike was seen as the smartest
market beginning to price inflation.”
• Essentially, the issue is that sovereign balance
sheets have expanded massively in the last
decade because of the stimulus rolled out in the
aftermath to the GFC – and more recently COVID.
• “Movement of official rates has become a key
sensitivity to massive asset markets globally –
equity markets in the US and probably the real
estate markets in Australia even more so,”
Widdup said.

14. Inflation Could Mean Short-term
Volatility - II
• “If inflation takes a grip, if central bankers
hesitate around official rate increases then there
is a picture of inflation growing unchecked.
• “So, I think the outlook for gold is volatile short
term whilst the buyers and sellers influence
within a range but there is insufficient of either to
move gold above or below resistance, then strong
long term on the basis of a strong return of
inflation.”
• Brookville Capital’s Simon Popple seconds the
short-term volatility.

15. Inflation Could Mean Short-term
Volatility - III
• “I think the outlook for the gold price depends on
a number of factors – some bullish and others
bearish,” he said.
• “If the world recovers from the pandemic I think
the price could go lower.
• “But if there are new variants and there’s no
solution to the debt problem prices are likely to
increase.
• “I’m expecting a lot of volatility over the next 12
months.”

16. Gold Price Rallies As Bond Yields,
Dollar Retreat : 13 Oct 2021
• Gold advanced nearly 2% on Wednesday on a
retreat in the dollar and US Treasury yields,
with investors’ focus on minutes from the
Federal Reserve’s latest policy meeting for
confirmation of its tapering strategy.
• Spot gold rose 1.9% to $1,794.73 per ounce by
noon EDT, near its highest in a month. US gold
futures were up 2.0% to $1,795.40 an ounce
in New York.

17. Gold Is Just Following Yields At The
Moment
• “Gold is just following yields at the moment.
• The initial reaction after CPI (consumer price
index) data was a big spike in yields, which is now
starting to fade away,” Daniel Pavilonis, senior
market strategist at RJO Futures, said in
a Reuters report.
• Gold initially pared gains as benchmark 10-year
Treasury yields rose above 1.6% after data
showed a solid increase in US consumer prices for
September, with further price jumps expected in
the coming months.

18. Gold Is An Inflationary Metal
• However, a subsequent pullback in yields,
which reduced the opportunity cost of holding
non-interest-bearing gold, drove a strong rally
in the precious metals market.
• “It’s a situation where gold is an inflationary
metal, which should be going up, but initial
rate shocks capped its upside potential,”
Pavilonis added.

19. Bullion Also Drew Support From A
Slide
• Bullion also drew support from a slide in the US
dollar and worries that high inflation could hit
global economic growth prospects.
• “Given how the stagflation talks continue to drain
global sentiment and promote risk aversion, this
could support gold bugs,” said FXTM analyst
Lukman Otunuga.
• Investors now await the release of minutes from
the US central bank’s September meeting amid
expectations for tapering of economic support as
soon as next month.

20. Gold Price Dives To 4-month Low
On Concerns Of Early Fed Tapering

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Gold Price Dives To 4-month Low On
Concerns Of Early Fed Tapering