THE gold market opened the week on a positive note, held up by increasing Sino-US trade tensions and a weaker US dollar. The market was also buoyed by Warren Buffett's Berkshire Hathaway Fund buying a stake in a major gold miner. Meanwhile, yields on US 10-year notes continued to slump.
Market bias was bullish as attention turned to the Federal Open Market Committee meeting in July, in which gold investors expected the Fed to continue to reassure markets. The FOMC minutes however disappointed, indicating that the Fed, though concerned about economic recovery, had a less dovish stand than expected. The Fed outlook triggered a rebound in both the dollar and Treasury yields, depressing gold to below US$1,900 an ounce.
US initial jobless claims unexpectedly rose to above one million and supported gold's recovery from its deep slide. Though the dollar remains weak and 10-year bond yields soft, the FOMC minutes rattled gold's rally, despite long-term fundamentals remaining unchanged. A vaccine is still not available and unless one is made readily available, the possibility of a second wave of the virus remains. Also, industries and jobs have not fully recovered, and central banks will keep interest rates low, which will boost gold investment demand.
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Source: BusinessTimes - 🏆 15. / 51 Read more »
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