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Investors are anxious despite a lull in the markets: FXTM

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Somewhat of a lull in the markets is in contrast to investors’ anxious sentiment, writes FXTM market analyst Han Tan. “The relative lull in the markets now belies investors’ anxiousness who are fretting over global downside risks. The gains in safe haven assets only speak to the rising fears in the markets which have prompted a clear pivot towards risk aversion,” the analyst says. Investors are worried about more U.S.-China trade war tensions and Brexit uncertainties, Han Tan states. The next big macro event is the U.S. Q2 GDP report, which will be released on Thursday and has the reach to impact the U.S. dollar. “A better-than-expected GDP print could hearten Dollar bulls, as they take comfort in the resilience of the U.S. economy. Should investors get the sense that the Fed will have to incur larger ‘insurance’ rate cuts, perhaps due to a steeper slowdown in the U.S. economy or rising downside risks, that should translate into another soft patch for the Dollar,” the analyst adds.

By Anna Golubova of Kitco News; agolubova@kitco.com

Break above $1,555 in gold opens door to $1,600 — MKS PAMP Group

Wednesday August 28, 2019 09:15

If gold can break above the $1,555 an ounce, it could open the door to the $1,600 an ounce level, says MKS PAMP Group. “The yellow metal has lagged silver in recent sessions and will target a break through USD $1,550 - $1,555 for an extension toward USD $1,600, while supportive interest remains broadly around USD $1,530 - $1,535,” MKS states. Silver prices, in the meantime, continue to rally after rising above $18 on Tuesday. “Price action was driven by a further extension of the yield curve inversion on the back of trade headwinds, in conjunction with a play on the XAU/XAG ratio as it collapsed underneath the 200 DMA,” MKS adds. “Silver remains in favor and looks set to test higher should USD $18 hold over the near-term.”

By Anna Golubova of Kitco News; agolubova@kitco.com

Fed might turn more dovish due to inverted yield curve: TD Securities

Wednesday August 28, 2019 08:52

Precious metals are continuing to benefit from the inverted U.S. yield curve and its impact on the Federal Reserve’s tone come September, according to TD Securities. “Gold and silver are catching a bid as US yields fall deeper into inversion, sending a message to the Fed that it will soon need to change its tone on the need for rate cuts as the market plays another round of poker with Powell,” the strategists at TD Securities say. Also, worsening conditions in Europe are likely to put further pressure on the U.S. yields. “The likely resumption of QE in Europe is set to push yields deeper into negative territory, which should ultimately push U.S. yields lower still,” the strategists write. What this means for gold is that allocation to the yellow metal will remain firm amid demand from money managers and central banks, the strategists add.

By Anna Golubova of Kitco News; agolubova@kitco.com

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