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  • Gold fell last week following the strong US Job's report
  • Gold fell last week following the strong US Job's report

    8 July, 2019

    Gold price behaviour:

    • Gold fell last week, after a six-week rally (LBMA -1.0%, XAU -0.6%). 
    • This occurred primarily on Friday, driven by a strong US Job’s report that drove the probability of a July 50bps cut from 25% to 0%, as well as a surprise increase in India’s tax duty to 12.5% from 10%.

    Fed rate cut probability


    Source: Bloomberg


    Volume and Liquidity:

    • Gold trading volumes continued to increase meaningfully to start the month with last week’s average at $184bn a day. The June average was $169bn vs YTD average of $115bn.
    • Interestingly, the Shanghai Futures Exchange volume increased significantly, with daily volumes at $14.5bn, well above the YTD average of $5.8bn; we recently highlighted Chinese investment behaviour in a blog.


    • The gold price rally finally paused, which was expected given the extremely overbought conditions. 
    • The gold price could be forming a bullish flag, which if confirmed would project the price of gold to approximately $1,550.



    • Realized volatility caught up to implied volatility as 30-day realized volatility is at the highest levels since 2016.


    30-day gold realized volatility


    Source: Bloomberg


    ETF Flows:

    • July began with small global inflows of $72mn, all from North America. 
    • Global inflows are $5.1bn on the year, led by European funds, that have added $4bn or 78% of global net inflows. 
    • We will be releasing the June ETF flows report on Tuesday, at 8am EST.