Daily Market Report

Gold marginally higher in lackluster summertime trading
Saxo Bank maintains a bullish outlook for the long run; sees headwinds short-term

(USAGOLD –6/29/2023) – Gold tracked marginally higher this morning in lackluster summertime trading. It is up $3 at $1913. Silver is up 17¢ at $22.93. Saxo Bank’s Ole Hansen says that though the short-term outlook for gold “remains challenged by the Fed’s prolonged battle with inflation,” it still has a bullish outlook for the longer tierm driven by a number of expectations – renewed dollar weakness, an eventual peak in interest rates, continued strong central bank demand, sticky inflation, and geopolitical tensions.

“On three earlier occasions during the past two decades,” Hansen points out in a detailed analysis released this morning, “a peak in US Fed funds rate supported a strong gold rally in the months and quarters that followed (See chart below), but with the timing of such a peak being postponed, short-term demand for ‘paper’ gold through ETFs and futures have suffered.… Total holdings in bullion-backed ETFs have seen a 42 tons reduction during the past month to 2888 tons, leaving it just 33 tons above a three-year low that was reached just before the March banking crisis triggered strong demand for havens, especially gold.”

Fed funds rate and gold price
Chart courtesy of TradingView.com