GOLD: negative August, but the downside is not over yet

The precious metal by definition, Gold, is on track to end August with a negative performance: from the initial level of $1.356, at the moment the commodity is trading way lower, at $ 1.313.

The reason way of this move, which led the price widely below the long term trend-line from September 2011 to October 2012, is linked to the market expectations of the Yellen speech on a likely rate hike, during Jackson Hole.

Following the Fed President’s words, briefly, the likelihood of a rate hike in the short term have increased and this led the rally of the USD and the consequent downside of the Gold, to the $1.308 low.

It is known indeed that the performance of the precious metal is closely linked to the bets on the short-term rate hike (two-years Treasury yield) and the recent Yellen’s words have done nothing but confirm that the hawkish statement had already been priced by the market.


Recent rumors about the failure of the negative rate strategy adopted by the major central banks, moreover, seems to confirm a new wave of monetary stimulus in the short term.

Despite this, however, from a comparative study between the price of the two-years Treasury and the price of Gold, additional losses could be expected: the performance of the Treasury is way down the post-Brexit high of 0,787%, while the precious metal is already traded above the pre-Brexit low of $1.251

Gold 31aug


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