Gold retreated on the lockdown easing narrative and USD gains as markets are having difficulty getting traction above USD1,700/oz this week; trading has been more or less in sideways fashion so far this week, with a downwards lean.
Both US and European equity markets struggled for direction, also with a downward bent, but did not elicit much of a rise from gold investors which suggests the US dollar is successfully competing for haven flows.
So, near-term gold may come in for some further pressure. But, with interest rates so low, there’s probably a limit to how far gold can fall – even in the case of an end to lockdowns.
India's services PMI plunged to 5.4 in April from 49.3 in March, while European data offered similarly downbeat signals. But gold investors appear less concerned with data beats and misses and more focused on optimism around reopenings. This continues to paper over the dreary economic scrim where the reality is that the downward leg of any V-shaped recovery is proving deeper than expected, all of which should support gold over the medium term.
As trade war becomes more prominent in the market discussion, so will the need for gold.
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Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support