Gold rebounds above Rs 1.58 lakh/10 grams as US bond yields decline. What lies ahead?
By:EconomicTimes
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Gold prices rose on the MCX on Thursday as
US Treasury yields fell sharply and the dollar remained subdued following a surprise liquidity support announcement by the US Treasury.
In the international market, gold hovered near its highest level in more than two months on Thursday after a surprise liquidity support announcement by the US Treasury pushed yields and the dollar lower. Spot gold jumped to $4,526 per ounce, the highest level since June 2.
This came as US Treasury yields fell, with the increased demand following an announcement that the Treasury Department would double the size of liquidity support buyback operations for longer-dated notes and bonds. The US dollar meanwhile remained muted, making the American greenback-priced metals cheaper for buyers holding other currencies
The recent pullback in gold prices may have created an opportunity for investors to gradually accumulate the yellow metal, according to Jefferies’ Global Head of Equity Strategy Christopher Wood and billionaire hedge fund manager John Paulson. Both believe the precious metal could be at the beginning of a long-term bull run.
Paulson, who turned his attention to gold in 2009 after making one of Wall Street’s most profitable bets against subprime mortgages, said in an interview with CNBC that demand for gold could continue to rise as confidence in paper currencies wanes.
“As people lose faith in paper currencies, gold as an alternative will continue to grow,” Paulson said.
“Gold is becoming the most apt reserve currency in the world, replacing fiat currencies,” Paulson said. “The demand from central banks, for instance, has continued to grow, as has the private sector.” Wood, in his Greed and Fear report, said investors should begin accumulating gold and gold mining stocks again after an extended pause.
(With inputs from agencies)
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Gold futures for October delivery on the MCX rose Rs 447 per 10 grams to Rs 1,58,443 on Thursday morning. December contracts jumped above Rs 1.6 lakh per 10 grams, while February contracts traded above Rs 1.62 lakh per 10 grams.
In the international market, gold hovered near its highest level in more than two months on Thursday after a surprise liquidity support announcement by the US Treasury pushed yields and the dollar lower. Spot gold jumped to $4,526 per ounce, the highest level since June 2.
This came as US Treasury yields fell, with the increased demand following an announcement that the Treasury Department would double the size of liquidity support buyback operations for longer-dated notes and bonds. The US dollar meanwhile remained muted, making the American greenback-priced metals cheaper for buyers holding other currencies
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Where is gold heading for?
Higher crude prices and continued uncertainty after the US-Iran MOU ended without fresh talks kept sentiment cautious for gold in the previous session, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. He noted that the Strait of Hormuz remains a key geopolitical trigger, while markets will also track the FOMC meeting minutes, US jobs data and crude movements for further direction. “Gold is likely to remain volatile as geopolitical developments continue to drive safe-haven demand,” according to the analyst.The recent pullback in gold prices may have created an opportunity for investors to gradually accumulate the yellow metal, according to Jefferies’ Global Head of Equity Strategy Christopher Wood and billionaire hedge fund manager John Paulson. Both believe the precious metal could be at the beginning of a long-term bull run.
Paulson, who turned his attention to gold in 2009 after making one of Wall Street’s most profitable bets against subprime mortgages, said in an interview with CNBC that demand for gold could continue to rise as confidence in paper currencies wanes.
“As people lose faith in paper currencies, gold as an alternative will continue to grow,” Paulson said.
“Gold is becoming the most apt reserve currency in the world, replacing fiat currencies,” Paulson said. “The demand from central banks, for instance, has continued to grow, as has the private sector.” Wood, in his Greed and Fear report, said investors should begin accumulating gold and gold mining stocks again after an extended pause.
(With inputs from agencies)
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