The Magazine for Asian Investors
Gold futures closed higher last night (December 28) due to the decline in U.S. government bond yields. Investors continue to have reason to worry and continue to buy gold before the turn of the year.
- Gold contract was up $2.1, or 0.12%, at $1,810.9 per ounce.
- Silver contracts were up 13.2 cents, or 0.57%, at $23.121 an ounce.
- The platinum was up $8.8, or 0.91%, at $979.8 per ounce.
- The palladium futures were up $54.10, or 2.8%, at $2,000.60 an ounce.
Gold futures gained momentum as the yield on the 10-year U.S. Treasury bond fell to 1.465% overnight.
Looking back on this year, gold and silver investors probably have mixed feelings. On the one hand, both precious metals have closed the year with a minus, on the other hand, the expected response to rising inflation has failed to materialize and the Fed plans to raise interest rates next year.
Nevertheless, the indicators for rising gold prices are what is factually still present. Negative real interest rates are what really drive gold buying and that real interest rates move into positive territory is unlikely to happen for a long time. People come to gold and silver when they are concerned about their continued purchasing power and that diminishes with rising inflation. To the interest rate policy of the Fed, one can probably count on delicate attempts to raise interest rates, but not to the extent that the real interest rates turn positive because if the interest rates rise dramatically, the U.S. probably can no longer pay their debts. In addition, the FED, thanks to its dual mandate, must also keep an eye on the labor market, i.e. a high-interest rate increase is a risk for higher unemployment. Finally, it remains to say that a bullish consolidation phase at the $1,800 mark is not a reason to be sad but rather an opportunity for further positioning.
Investors continue to keep an eye on the COVID pandemic situation. The Dutch RIVM has announced that the Omicron strain is now the predominant strain in the Netherlands. In addition, more countries in Asia are reporting the first Omicron cases.
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Wednesday, December 29, 2021