Gold to continue drawing strength from negative US real yields
- Negative US 10-year real yields power gains in gold.
- The yellow metal is a hedge against inflation.
Gold, a zero-yielding safe-haven metal, has gained 17% so far this year.
The negative real or inflation-adjusted US Treasury yields seem to have power gains in the yellow metal and could continue to support the uptrend in the near term, according to Holger Zschapitz, senior editor at the economic and financial desk of the German daily Die Welt.
As seen above, gold has rallied from $1,450 to $1,789 over the past three months, while the US 10-year real rates have declined from 0.60% to -0.73%. Negative real yields essentially represent inflation or a decline in purchasing power and gold is a hedge against inflation.
Real rates could slide further, as the Federal Reserve is unlikely to halt treasury purchases anytime soon. As such, gold could continue to gain altitude and may test the $2,000 mark in the next 12 months, as forecasted by Goldman Sachs.
At press time, gold is trading at $1,775, representing a 0.10% gain on the day. Price hit an eight-year high of $1,789.15 on July 1.
Technical levels
Reprinted from FXStreet,the copyright all reserved by the original author.
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
FOLLOWME Trading Community Website: https://www.followme.com
Hot
No comment on record. Start new comment.