It hardly a riddle that needs solving. The Fed has painted itself into the proverbial corner. They've all but thrown in the towel on returning any time soon to "normal" growth and now with Yellen's "higher pressure" economy speech they've also told you something else.
They'll have a difficult time getting overly aggressive with kicking up interest rates should inflation get too far out of hand. They are in the minds of many already lodged in purgatory. Miscalculating further would put them some other place they don't want to go.
So a stronger dollar and higher bond yields might not cushion against higher gold prices as in the past.
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kitco.com/news/2016-10-17/Higher-Bond-Yields-Won-t-Dim-Gold-s-Luster-Analysts.
Bond markets are grabbing investors’ attention Monday as yields in U.S. 10-year note rose overnight to its highest level since early-June; at the same time, German and U.K. 10-year bonds hit their highest levels since late-June. Despite being off their recent highs, yields are still relatively elevated with 10-year bonds trading around 1.76%. Meanwhile, U.K gilts had a yield of 1.15%, its highest level since the Brexit referendum. Finally, German Bund managed to jump back into positive territory with its yield at 0.073%.
They'll have a difficult time getting overly aggressive with kicking up interest rates should inflation get too far out of hand. They are in the minds of many already lodged in purgatory. Miscalculating further would put them some other place they don't want to go.
So a stronger dollar and higher bond yields might not cushion against higher gold prices as in the past.
----
kitco.com/news/2016-10-17/Higher-Bond-Yields-Won-t-Dim-Gold-s-Luster-Analysts.
(Kitco News) - Higher global bond yields might not be a major hurdle for the gold market as analysts say there are other factors that still make the yellow metal attractive.
Bond markets are grabbing investors’ attention Monday as yields in U.S. 10-year note rose overnight to its highest level since early-June; at the same time, German and U.K. 10-year bonds hit their highest levels since late-June. Despite being off their recent highs, yields are still relatively elevated with 10-year bonds trading around 1.76%. Meanwhile, U.K gilts had a yield of 1.15%, its highest level since the Brexit referendum. Finally, German Bund managed to jump back into positive territory with its yield at 0.073%.
This jump in yields was not enough to hurt gold with the metal managing to hold key support above $1,250 an ounce on Monday. December gold futures settled the day at $1,256.60 an ounce, up 0.09% on the day.
Barry Potekin of RMB Group, said that contrary to historical norms, he could see gold move up in step with bond yields. He added that opportunity costs aren’t the only thing that investors should be paying attention to in this current market environment.
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