Think Portfolio Insurance When Buying Gold in Here
Gold (NYSEArca:GLD) is ranged within 1,190 and 1250 oz short term as the metal tracks US real interest rates.
“We’re not saying we have a Bullish bias; we’re not saying we have a bearish bias,” siad executive director for commodities and foreign exchange at UBS Tuesday. “We’re saying that tactically, people should be buying it somewhere near 1,200 and selling it again somewhere near 1,300, and it’s because we have a view that real rates go sideways. So the pickup in nominal rates will be equally matched by the pickup in inflation.”
Gold climbed nearly 9% in Q-1, driven in part by worries over Donald Trump’s Uresidency and geopolitical risks.
Prices have since declined in consolidation of the move posting their 1st monthly decliner this year in June.
Monday, the precious Yellow metal fell the most since November as equities and bond yields rallied, before North Korea’s launch of what the US said was an intercontinental ballistic missile sparked a bounce.
The price is trading at 1,224.28 in Asia as I write this report.
If US unemployment keeps falling, and the Fed keeps raising interest rates no matter what the inflation data show, that will be negative for Gold short term.
Still, solid demand this year and weaker output, coupled with a lower USD, are positive for Gold prices, and should equity valuations start to fall investors will likely turn to Gold as a safe-haven.
Gold can act as insurance if the labor market does not show further improvement in the US and inflation does not pick up, which would make the Fed pause on its rate hiking program.
I like the insurance qualities for Gold just from an unknown perspective at these marks.
Bullion rose as much as 0.8 in 2 days after North Korea’s rocket launch revived geopolitical concerns.
US Secretary of State Rex Tillerson called the act a “new escalation of the threat” and the United Nations Security Council plans a closed session later Wednesday after a US request.
Gold could be ranged within 1,190 -1,350 in 2-H of this year, depending on how global equity markets perform, whether President Trump can implement his economic agenda and how the USD holds up
Investor holdings in the SPDR Gold Trust (GLD), the biggest ETF backed by Bullion, have shrunk to 846.29 tonnes, the lowest level in nearly 3 months.
|HeffX-LTN Analysis for GLD:||Overall||Short||Intermediate||Long|
|Bearish (-0.42)||Bearish (-0.48)||Bearish (-0.31)||Bearish (-0.47)|
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