Gold was sharply lower last week (LBMA -1.8%, XAU -1.5%) on the back of higher yields, a stronger US dollar and a risk-on environment.

Goldhub blog

Gold was sharply lower last week (LBMA -1.8%, XAU -1.5%) on the back of higher yields, a stronger US dollar and a risk-on environment.

Adam Perlaky
Manager of Investment Research
World Gold Council

Posted:

  • Gold was sharply lower last week (LBMA -1.8%, XAU -1.5%) on the back of higher yields, a stronger US dollar and a risk-on environment. We expect US yields to influence gold’s short-to-medium term performance as broad markets continuously adjust expectations about what the Fed may do over the coming months (see: The impact of monetary policy on gold, March 2019).
  • The gold price remains below the key technical level of $1,290, which represented the neckline of the bearish head-and-shoulders pattern. Absent a near-term rally, we would anticipate a fall to $1,225 based on that technical indicator
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  • COMEX net longs decreased sharply last week from 365t to 173t, the lowest levels since 12/3/2018 as gold has fallen 2% in the past two weeks.
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  • Globally, gold-backed ETFs experienced outflows last week of US$769mn. European flows were negative US$335mn. Month-to-date, flows are negative (-US$1.2bn) worldwide. North American gold-backed ETF flows are now negative on the year. Global flows are still positive on the year with the European region the only one with positive flows
  • As US markets near all-time highs, many experts argue the market is ‘tired’ with US/China trade relations, a dovish Fed, and weaker expected earnings baked into stock prices. We will get further clarity on the economy this week as many tech companies report along with a GDP report on Friday that will highlight the effects of the government shutdown in Q1 on the economy