Gold Fundamental Outlook: Neutral
At the beginning of this past week, gold prices tumbled in the worst performance over a daily basis since the middle of August, catching some investors off-guard. Yet, follow-through struggled as the precious metal spent most of its time consolidating afterwards. XAU/USD’s behavior that day served as a reminder for traders of the downside fundamental risks.
This past Monday, Pfizer reported that its Covid-19 vaccine was more than 90% effective in preventing the disease. As a result equity markets, specifically sectors that were most impacted by the pandemic (such as travel and tourism), rallied the most. This optimism also extended into bond markets. Specifically, Treasury yields on the far end of the maturity spectrum soared – see chart below.
The latter reflects growth confidence in the medium term, pushing up real Treasury yields (inflation-indexed bonds). Gold is inherently an anti-fiat asset and generally suffers when rates of […]
November 15, 2020 (updated November 15, 2020) Published by StockMan