Gold declines as investors await stimulus from policy makers

As investment bank Citi noted: “With a “Leave” result now confirmed, gold remains a beneficiary of ongoing uncertainty”. Most predicted a decline below $1,000.

The recent rally in US equities SPX, +0.00% DJIA, +0.10% had tarnished the appeal of precious metals, often used as a hedge against higher-risk investments.

Gold for August delivery gained 0.22% to $1,346.55 a troy ounce in Asian trading hours but is now down to $1,325 an ounce. Silver prices have leap almost 50 percent so far this year, reversing three years of losses, but history shows investors hoping to hop aboard the bandwagon should be wary.

Asian shares came within reach of testing their 2016 peak on Wednesday as prospects of solid USA growth and accommodative economic policy in major countries whet investors’risk appetite damaged by uncertainty from Brexit. But the BOE chose to wait until August to move on rates so it has more data and better insight on the state of the economy. Asia could create a $200 to $500 rally for gold, he says. “We have recently broken above some really important resistance levels at around $1,300/oz for gold, and maybe we can see it move back above $1,525/oz”. “I think we’re certainly going to see $1,400 quite soon and I think we’ll certainly see $1,500 by year end and maybe even that $1,900”.

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Goldcorp is a Vancouver-based gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the U.S., Mexico and Central and South America. In June alone, GLD took in $3.3 billion new money.

Silver Today –The silver price closed in NY at $20.38 on Wednesday up from $20.09 Tuesday.Ahead of New Yorks opening the price was trading at $20.15. Both metals reached multi-year highs last week. The Dow Jones Industrial Average reached fresh all-time highs on Wednesday, while the S&P 500 pared losses to finish flat. So far in 2016, gold has performed 25% better than stocks and silver has risen over 40% higher than stocks.

A reduction in holdings in exchange traded funds (ETFs) added to the weakness, with the largest fund, SPDR, seeing a 16 ton outflow. For years, China and India comprised 50% of global gold demand.

The three key benchmarks were all solidly higher today.

Bonds no longer provide safe and steady returns.

Roughly $13 trillion in negative-yielding debt, according to The Wall Street Journal.

Investors returned to precious metals after the June 23 Brexit vote. In a decade, 2013 was the first year when the gold price in United States dollar met failure.

Foreseeing the upcoming fluctuations in Gold price, traders are seeing this as a good opportunity to buy gold to keep it as a valuable physical asset for future. The number of Japanese gold buyers shot up 62% in the first six months of this year.

Accommodative monetary policies favour gold as well as equities because low interest rates encourage investors to opt for assets that do not rely on interest yields.

With over 20 years’ experience in the heart of the investment industry, Ben Myers has become one of the most respected commentators in the financial world.

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