RE: A beautiful update on all fronts20 Nov 2020 07:48
FT article this morning, healthier there is such a tussle at the moment. “Surge in vaccine optimism slams brakes on Gold. Rising prospects of a Covid-19 vaccine are threatening to kill off the bull market for gold, after an epic two-year rally that pushed the precious metal to a record high in the summer.
Gold prices have already fallen about 10 per cent since their August peak above $2,000 a troy ounce, as confidence gradually returned to asset markets. This could be the start of a sustained slide for the metal, after two successful trials for Covid-19 vaccines emerged in November... Analysts at Macquarie say the “cyclical bull market” for gold has already come to an end: they compare today to 2013, when a decade-long rally foundered as the “crisis of the day subsided and expectations for further policy easing diminished”. The bank expects gold prices to fall to $1,550 a troy ounce next year — a drop of about 17 per cent from current levels... The recent sell-off has been stoked by outflows from gold-backed exchange traded funds, which were a key factor in the surge in the first half of the year. Since peaking in mid-October, these funds’ physical holdings have fallen by 1.9m ounces to 109m, according to Bloomberg data. Holdings in the largest such ETF, SPDR Gold Shares, hit their lowest level since July this week.”
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Susan Bates, an analyst at Morgan Stanley, says the bank sees “bear factors” coming together for gold, such as a recovering global economy, aided by the eventual rollout of a Covid-19 vaccine, and a rise in bond yields.... Goldman Sachs says the risk of inflation is “greater than at any other time since the 1970s,” due to pledged green spending plans in China, Europe and the US by Joe Biden, the president-elect. The bank, which expects the Federal Reserve keeps rates on hold until 2025, predicts gold will reach $2,300 an ounce in the coming months. Citi, meanwhile, predicts gold prices will set fresh highs in 2021, as central bank buying keeps yields on other assets suppressed.... But others think any speed-up in price rises will be outweighed by the effect of the wider economic rebound.
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