Gold pushes sharply higher in advance of today’s FOMC meeting

(USAGOLD – 6/10/2020) –  Gold pushed sharply higher in advance of the FOMC meeting scheduled to kick off today – one in which the Fed is likely to emphasize staying the course on its stimulus policies and offer reassurances to financial markets. Typically gold trades sideways to down in advance of Fed meetings so the move higher over the past three days has been something of a surprise. It is up $10 on the day at $1729. Silver is up 41¢ at $18.

For those wondering how gold could display such stubborn resilience at a time of strong public interest in stocks, TD Securities offers a credible explanation. “The gold bull is coming back,” it advises in a report published at FX Street yesterday. “Recent weeks have placed a cloud of doubt over the sustainability of the yellow metal’s bull market. After all, it’s hard to justify buying a shiny rock when global equity indices are surging at a record pace. … We reiterate that those selling gold in response to risk-on are improperly discounting the macro implications – the Fed will maintain its uber-easy policy for the foreseeable future, and may even utilize more tools (such as yield curve control) to support yields amid the forthcoming and massive Treasury issuances. Real rates will ultimately be further suppressed – and macro drivers such as this have been the primary driver for accumulation of gold over the past months. We continue to expect capital to seek shelter in gold from a prolonged period of negative real rates. Systematic trend followers are maintaining a long bias in gold, with a rising hurdle rate for liquidations.” 

Chart of the Day

chart showing choppy waters for the dollar amidst the coronavirus

Chart note:  Not much has been said and reported on the US dollar of late as other assets have moved front and center in the world of money and finance.  Since the true impact of the coronavirus began to be felt in February, though, the dollar has turned in an erratic, choppy performance. At the moment, unpredictability and volatility appear to be the dollar market’s most distinguishing features. 

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