15 June 2021

Gold Range-Bound Awaiting Clarity on Monetary Stimulus

Gold has traded in a range around the $1,860/oz mark for the past three days, after slipping down from the $1,900 level this week. 


Gold prices moved higher on Thursday as the U.S Dollar weakened 0,28% from its five-day high. U.S Treasury yields tumbled below 1.50% – reaching a new three-month low of 1.428%. Lower bond yields reduce the opportunity cost of holding the yellow metal. 


The gold market is still very volatile – as investors are waiting for clues from the two-day U.S Federal Reserve policy meeting, hoping to get clarity on the trajectory of the Fed’s stimulus (printing) plans. 


Analysts at Commerzbank stated that they expect inflation concerns to drive gold to $2,000/oz by the end of the year. They added that inflation will possibly continue to remain at a high level throughout the next quarter, which could force the Fed to reduce their bond purchases by the end of the year. 


In other news, the Central and Eastern European Bank nations have been purchasing increased amounts of gold over the past year. Most notably, Poland added 200 tonnes and Hungary added 95 tonnes to their gold reserves.  The ECB said that: “gold remains an important element of global monetary reserves, as it continues to provide asset diversification benefits.”


The yellow metal was last seen trading at $1,864/oz.

Jaco Lups