Gold 1749,375
|
EURUSD 1,1714
|
DJIA 34122,50
|
OIL.WTI 71,205
|
DAX 15487,50
|
|---|
Just over a year ago, the price of gold reached its record high of $2,000 per ounce. But lately, gold has been underperforming and often loses $40-50 per ounce before recovering almost all of its losses.
Gold
When strong macroeconomic data are released in the US, the dollar starts to show great momentum and rises while gold falls. As soon as the data is weak, the dollar falls and gold either rises very reluctantly or in most cases simply goes nowhere. It used to be just the opposite. As soon as the dollar is in trouble, investors move into gold and sell it only in exceptional cases, when the market is doing well.
This situation shows that gold is not fulfilling its role as a shelter asset at all. The situation has changed a great deal. The world’s banks have been pumping money into their economies for a very long time. The US alone has spent more than 2 trillion dollars in a year and a half to support the economy. By all the rules of economics, that much money should have devalued the dollar. But it is not happening. There are some factors that keep gold from rising.
One suggestion is that bitcoin has pulled in a significant amount of cash flow. Although it is now difficult to imagine that bitcoin could be an asset safe haven. Its value could change too much.
Another hypothesis is about inflation and the US Federal Reserve. After all, they say in all meetings now that inflation is under control. Therefore there is no need to protect assets from inflation and buy gold.
The market has completely lost its fear and is no longer afraid of anything. A serious correction in indices has not taken place for almost a year. There is no need for investors to fear and get out of risky assets. While the markets will be pumped with artificial liquidity, the gold will not reach the price of 2000 dollars per ounce. It takes enough serious negative news and “fear” in the market for that to happen.
08.00 German producer price index for August
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.