Gold remains sensitive to signs of Fed tapering. Cooling inflation and softer labour data have raised the risk of a delay in tapering. But expectations around Fed tapering later this year are set to weigh on XAU/USD, economists at ANZ Bank report.
Renewed strength in the USD to drag gold lower
“Strong economic data through September will be important for the Fed to announce tapering from November. Winding-down of asset purchases later this year and the prospect of rate hikes would be supportive for the US dollar and a headwind for gold prices.”
“Disappointment in jobs data or softer inflation could provide some upside room for the yellow metal.”
“Gold prices have decoupled with US 10y yield and TIPS. However, we don’t see this trend lasting much longer. Our gold valuation model suggests it is still significantly undervalued.”
“Expensive equity valuations and other uncertainties are raising the odds of a market correction, with S&P and the gold ratio hitting a 2008 high. This could encourage investors to hold safe-haven assets.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.