Commerzbank: Gold climbs as U.S. Treasuries drop to a six-week low

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(Kitco News) - Commerzbank commodities analyst Daniel Briesemann has been monitoring the gold markets closely for a while now. In his most recent note, Briesemann said the drop in rates could have led to the rise in the gold price. 

 

He noted "Surprisingly good labour market data for October were published in the U.S. on Friday. The US labour market is heading for full employment, a state that could be reached during the course of next year. Last week, Fed Chair Powell highlighted that full employment was the key criterion for the bank to raise interest rates. The gold price has defied the data and the resulting firm US dollar and has actually gained by a significant 1.5%. This morning it has been trading for a time at a two-month high of $1,820 per troy ounce. It seems there is “life in the old dog yet”. " When adding yields to the equation "Gold was lent buoyancy by lower bond yields: yields on ten-year U.S. Treasuries had dropped to a six-week low of 1.43% on Friday, despite the robust labour market data. This has made gold more attractive as an alternative investment. That said, this is not reflected in investment demand: ETF investors also sold holdings on Friday, and speculative financial investors have not expanded their bets on rising gold prices any further of late." Lastly, he added "According to the CFTC’s statistics, their net long positions remained largely unchanged in the week to 2 November. In contrast to the muted investment demand, physical gold demand appears strong at present, which is benefiting gold. Robust gold demand has been reported from India in particular recently amid the Dhanteras and Diwali festivals (see Commodities Daily from 5 November). Previously, the World Gold Council had already talked about significantly higher third-quarter gold demand in India and China. The other precious metals besides gold have also picked up of late, though not necessarily to a disproportionate extent."By Rajan Dhall

For Kitco News

Follow rajfx10rdhall@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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