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6 Aug 2015
Outlook for Gold remains bearish – BAML
FXStreet (Edinburgh) - According to analysts at BAML, the perspective for the precious metal remains tilted to the downside.
Key Quotes
“Gold prices have shown a persistent lack of strength in recent months. This was driven by a confluence of factors. Most notably perhaps, physical offtake in India and China, two key markets for gold, has been subdued on a range of country-specific factors”.
“Meanwhile, investors globally have shown limited interest in the metal, reflected in steady declines of assets under management at physically backed exchange traded funds”.
“In fact, investors tend to be the marginal drivers of gold and their buying generally revolves around four key themes: USD, US rates, risk level changes and the wider commodity complex”.
“The recent massive appreciation of the US currency has impacted gold, a dynamic mirrored by the very high correlation between the two assets of late. Of course, much of the recent USD strength has been driven by monetary policy divergence”.
“As such, reaffirmations by the ECB that rates would stay low in Peripheral Europe have not helped gold. Put differently, the Greek debt crisis is not bullish for the metal this time around”.
Key Quotes
“Gold prices have shown a persistent lack of strength in recent months. This was driven by a confluence of factors. Most notably perhaps, physical offtake in India and China, two key markets for gold, has been subdued on a range of country-specific factors”.
“Meanwhile, investors globally have shown limited interest in the metal, reflected in steady declines of assets under management at physically backed exchange traded funds”.
“In fact, investors tend to be the marginal drivers of gold and their buying generally revolves around four key themes: USD, US rates, risk level changes and the wider commodity complex”.
“The recent massive appreciation of the US currency has impacted gold, a dynamic mirrored by the very high correlation between the two assets of late. Of course, much of the recent USD strength has been driven by monetary policy divergence”.
“As such, reaffirmations by the ECB that rates would stay low in Peripheral Europe have not helped gold. Put differently, the Greek debt crisis is not bullish for the metal this time around”.