$XAU, $GLD, $USD, $EUR
Shayne and I see gold testing to $1384ish and then setting up to drive North, potentially topping $1,500 oz, as interest rates head lower, central banks extend purchases, and uncertainty surrounding geopolitics and cryptocurrencies fans demand.
Gold on the COMEX finished -1.4% to $1400.95 oz.
“I love gold,” said Mark Mobius, who set up Mobius Capital Partners LLP last year after 30 yrs at Franklin Templeton Investments.
He added that bullion should always form part of a portfolio, with a holding of at least 10%. “As these interest rates come down, where do you go?”
Gold has rallied in Y 2019, rising to the highest marks in 6 years, as investors contemplate slowing economic growth, prospects for easier monetary policy in the US and Europe, and festering trade frictions. The upswing has been given added momentum as central banks, including authorities in Russia and China, step up purchases. A revival in crypotocurrencies may lead to spillover demand from investors for the safe haven.
Interest rates are going so low, particularly now in Europe. So, what is the sense of holding EUR when you get a negative rate?
You might as well put it into gold, because gold is a much better currency.
Meanwhile, gold fell as much as 2% Friday and was set for its 1st weekly fall in seven weeks after data showed US jobs growth rebounded strongly in June, which lowered the likelihood of an interest rate cut by the Fed this month
NFPs increased by 224,000 jobs last month, the most in 5 months, data showed. Economists polled by Reuters had forecast payrolls rising by 160,000 jobs.
The US jobs data is driving all the pressure on gold right now. The payroll numbers crushed all expectations. That may decrease the urgency for a Fed cut in July.
Adding pressure on gold, the USD rose to an over 2-week high Vs a basket of 6 peer currencies.
Gold is highly sensitive to interest rates and a lower chance of a cut would increase the opportunity cost of holding the non-interest-bearing bullion.
Have a terrific weekend.
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