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.

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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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