Head of Commodity Strategy
Gold is trading back above $1,200/oz as it continues to recover from its mid-August nadir. A continued recovery could eventually trigger an accelerated rally due to short-covering from hedge funds currently holding a record short. For now, the key source of inspiration for gold traders remains USD, and this is true for both bulls and bears.
The strong dollar surge following the collapse of the Turkish lira was halted in mid-August when President Trump criticised the Federal Reserve while saying that Jerome Powell had not been the cheap money chairman he had hoped for, and as a result the dollar was too strong.
(Some other reasons for the latest dollar weakness and renewed appetite for risk can be found here in John Hardy’s latest forex update.)
Gold is currently challenging the next area of resistance at $1,217/oz with a break above opening up for a move to $1,235/oz. Continued dollar weakness is needed to trigger a short-covering rally from funds holding a record short.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
