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TDS: Gold Shines As Treasury Yields Fall Below 2%

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Gold has regained its shine as a break below the psychologically important 2% mark in U.S. 10—year Treasury yields helped fuel demand for the yellow metal, said TD Securities. Analysts said that there are “mounting fears that interest rates are on a one-way train to zero.” They pointed out that U.S. President Donald Trump's new Federal Reserve nominees, who have a reasonable chance of confirmation, both lean in a dovish direction. “Even without these nominees, we would expect the Fed to begin easing rates in July, but a confirmation could lead to further bull steepening of the curve, which could add yet another leg of upside to gold's returns,” TDS said. As of 9 a.m. EDT, spot gold was 80 cents higher to $1,418.90 an ounce.

By Allen Sykora of Kitco News;


BBH: Treasury Yields Keep Falling But U.S. Dollar Holds Up

Wednesday July 03, 2019 09:03

The U.S. dollar is holding up even as Treasury yields keep falling, as other major central banks appear to be in cutting mode also, said Brown Brothers Harriman. “The 10-year yield is trading near 1.95%, the lowest since November 2016,” BBH said. “After flirting with a positive slope last month, the three-month to 10-year curve is back to -23 bp [basis points], the most inverted since June 3.” Further, BBH said, the January 2020 Federal funds futures are back to fully pricing in three rate cuts this year. “The fact that the dollar is holding up well in this environment shows that the move in U.S. yields is not occurring in a vacuum,” BBH said. “The ECB [European Central Bank] is likely to cut rates in September, while the BOJ [Bank of Japan] is likely to ease further this fall. The BOE [Bank of England] just took a dovish turn, while the Antipodeans are already cutting rates. Relatively speaking, U.S. interest rates remain attractive.”

By Allen Sykora of Kitco News;


Commerzbank: Gold Rallies In Absence Of Risk Aversion

Wednesday July 03, 2019 09:03

The current gold rally is occurring without the benefit of risk aversion, Commerzbank analysts pointed out. The metal sometimes rallies when stocks sell off and investors are avoiding risk. The metal rose 2.5% Tuesday and is rising further on Wednesday. “Reaching just shy of $1,440 per troy ounce for a time, it has nearly regained last week’s six-year high,” Commerzbank said. “In view of the sharp falls in oil and metals prices, one might assume significantly higher risk aversion among market participants. However, this is contradicted by the fact that stock markets did not fall yesterday. The gold ETFs [exchange-traded funds] recorded their most pronounced daily outflow since the end of May yesterday, which likewise argues against any increase in risk aversion.”

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