XAU/USD: The key for gold are yields, not USD – HSCB
|Analysts at HSBC believe that the near-term driver for gold is US Treasury yields. They consider COVID-19 concerns, monetary and fiscal stimulus support gold.
Key Quotes:
“Our precious metals analyst thinks a stronger USD could be a block for gold in the longer term. Normally, gold trades inversely with the USD. But for many months it has tended to trade directionally with the USD. We have submitted that this may be because investors are looking for safe havens and have moved into the USD, US Treasuries and gold simultaneously. If we enter a process of normalization, the USD and gold may revert to their more traditional inverse relationship. We think the USD is neither going to enter a bear or bull market, but will instead be firm which would present headwinds to gold rallies.”
“Currently, the key for gold is not the USD, our precious metals analyst believes, but yields. Gold has been sensitive to the US 10-year Treasury yield. The last drop in gold below USD1,700 per ounce earlier this month was accompanied by a jump in the US 10-year Treasury yield to 0.95%.”
“Gold can give up more ground near-term. But accumulated risks, combined with long-term stimulatory monetary and fiscal spending, will likely put a near-term floor on gold prices.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.