Daily Gold Market Report


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Gold grinds lower on China concerns and the prospect of higher rates
Saxo Bank sees the carrying cost as keeping a liked on the metal’s short-term prospects

(USAGOLD – 8/15/2023) – Gold continued to grind lower this morning as concerns about China’s economy and further rate increases pressed on short-term prospects. It is down $4 at $1905.50. Silver is down 17¢ at $22.50. Saxo Bank’s Ole Hansen sees the high cost of carry as one of the chief headwinds keeping a lid on the metals’ short-term prospects. “It’s clear,” he says in an analysis posted late last week, “that the bulk of the increase from next to nothing back in 2021 to the current 5.8% has been driven by the rising funding cost of holding a position in gold.”

“Looking at correlations to other markets,” he adds, “the biggest input currently is coming from movements in the dollar, and the greenback has seen broad strength this past week supported by higher bond yields adding downside pressure to the Japanese yen while other Asian currencies have struggled amid the aforementioned weakness in Chinese economic data. Apart from dollar strength hurting sentiment, we continue to see asset managers and long-term investors reducing their exposure to gold through ETFs. Since the May peak that followed the March banking crisis, total holdings in ETFs have slumped by 109 tons to 2821 tons and the lowest since January 2000.”

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