Gold - Safe, Sound And Stable

In my weekly blogs, I generally talk about gold’s performance, why it has behaved in a particular manner in the respective week, how it looks like and a major economic outlook of the yellow metal.

But today I would like to write about gold from the investors or the markets view point- as to why gold has been in high demand in spite of rising prices, should you look at gold from an investors perceptive, should you diversify your portfolio in to the yellow metal etc.

Gold creates a feeling of safety and security. Most retail investors and fashion and lifestyle consumers trust gold more than the currencies of countries

A bar of gold always retains its value, crisis or no crisis. This creates a sense of security.

As we all know that gold is an asset that has highest liquidity. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.

One of the main reasons, apart from de-dollarization, why central banks have started piling up their reserves.

A study reveals two out of three investors sees gold as a safeguard against inflation and currency fluctuation. A similar number believe gold holds value in the long term, owning the precious metal makes them feel secure and is more trusted than most currencies.

Instead of discouraging people from buying gold, or convincing them that gold is an irrelevant asset, many of these financial advisors are increasingly honest about the true properties of this monetary metal and what importance it holds in your portfolio.

Seeing gold’s safe haven appeal and store value, I wouldn’t be wrong if I say that it is one of the most sought after precious metals.

It is considered as a global medium of payment and it preserves high purchasing power. A country high on gold reserves is always considered as an economically rich and sound country. Gold is highly durable and enduring.  In the past gold was also considered as a means of currency. Even today, every reserve currency in the world today is underpinned by vast gold reserves. Gold is and will always be considered as a strong pillar of stability for any monetary system.

On the other hand when we see the other assets in its class- Shares, bonds and other securities, real estate etc, none of them are risk free and subject to high fluctuations and prices drops during uncertainties. But gold will always yield its value even when times are critical.

Looking at the current year- 2019 has certainly been an exciting year, with gold breaking through long-defended resistance levels.

When we look at the current markets we can see that gold is being pulled and pushed by various factors simultaneously, in fact tether are some factors that contradict itself in influencing gold prices-.

The topics dominating the headlines — Brexit, the US-China trade war and the possible impeachment of US President Donald Trump — all have an effect on the global economy.

In  Prithviraj Kothari's opinion, The performance of gold in 2019 looks even more impressive relative to other precious metals such as silver and platinum.

Strengthening US dollar contradicted by slow global growth- The price of gold and stock markets have seen record highs and the US dollar is strong. At the same time, the US Federal Reserve and European Central Bank (ECB) have been cutting interest rates, yields on $17 trillion (Dh62.4tn) of bonds have turned negative and global economic growth has slowed.

The International Monetary Fund revised down its projections of global economic growth for the fifth time last month with the world’s economy expanding 3 per cent this year, its slowest expansion since the 2008 global financial crisis.

Against this interest rate backdrop, defensive positioning by investors is on the rise, which is supporting gold’s upward price movement in several ways. As global uncertainty has risen, investors have responded according to conventional wisdom, turning to fixed income markets for both safety and stability.

Anybody who’s holding 50 per cent in equities and going towards riskier, non- investment-grade bonds because they need yields should have between 5 and 8 per cent gold in their portfolio.

despite a slight risk of prices declining to the $1,450 an ounce level first, the overall picture for gold is optimistic as investors look ready to buy more.

Gold Will Get Its Support

Negative news coming from all over proved to be positive for gold during the week.

Weakness in global growth, lack of clarity in US China trade dispute, weak economic data coming from Asian markets, negative Asian equities, Powell’s speech, unrest in Hong Kong and other ongoing risks, together proved to be good support for gold-

Trade Dispute- On the Sino-U.S. trade front, tensions seemed to have escalated again as the Wall Street Journal reported that the trade talks have stalled over agriculture purchases.

The Journal cited sources and reported that China is unwilling to quantify its farm purchases, a commitment China made as part of a phase one trade agreement.

The news dented hopes that the phase one deal will be signed sooner rather than later, according to the article.

China is also resisting U.S. demands to make reforms on forced technology transfer, which the Trump administration has previously said would be addressed in future trade deals with Beijing.

Furthermore, President Trump revealed that “we were so close to a deal” while speaking at the Economic Club of New York, and went onto emphasized the administration’s approach to “tell it to everybody: if we don’t make a deal, we’re going to substantially raise those tariffs.”

Weak Data numbers- A set of worse-than-expected economic data were cited as providing support for the yellow metal.

Gold prices gained on Thursday in Asia following the release of weak economic data coming out from China, Japan and Australia. Sino-U.S. trade uncertainties also attracted some safe-haven demand.

Powell’s Speech- fresh remarks from Fed officials suggested that the central bank will move to the sidelines and endorse a wait-and-see approach at its next interest rate decision on December 11 as Chairman Jerome Powell told US lawmakers that “the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth.”

U.S. Federal Reserve Chair Jerome Powell on Wednesday told the Joint Economic Committee that negative interest rates sought by Trump are not appropriate for the U.S. economy right now.

He also added that the central bank would probably stop (with interest rate cuts) where it is unless there is a “material” change in the economic outlook.

Chinese data- Gold is being supported as the Chinese industrial production and retail sales came way below expectations. In China, October’s industrial output, retail sales and fixed-asset investment all came in worse than forecast, while Japan’s Q3 GDP also grew less than expected.

Asian equities- Asian stocks fell after China’s industrial output grew significantly slower than expected in October, as weakness in global and domestic demand and the drawn-out Sino-U.S. trade war weighed on activity in the world’s second-largest economy.

Unrest in Hong Kong- Anti-government protesters in Hong King, paralysed parts of the city for a fourth day, forcing school closures and blocking highways and other transport links and creating further unrest.

Deterioration in Hong Kong this week will further support gold but what are even more impactful are the ongoing trade talks.

All the above mentioned influencers have been playing an active role in the movement of gold prices. In the long term, the backdrop is pretty conducive. With the global central banks being accommodative, gold will get its support.

In Prithviraj Kothari’s opinion all the above mentioned influencers have been playing an active role in the movement of gold prices. In the long term, the backdrop is pretty conducive. With the global central banks being accommodative, gold will get its support.

Gold Likely To Be Pushed Into The Positive Territory

Last week, Gold opened tested the $1515 resistance area but it failed to break higher and made a sharp reversal, losing more than $50 over the last week, the worst weekly performance in years.

It was a tough week for precious metals. Gold was down almost $50, silver down $1. This pull down came in over optimistic trade dispute talks.

On Thursday , Chinese Commerce Ministry spokesman Gao Feng announced that both parties have agreed to roll back tariffs on each other’s goods as part of an upcoming trade deal. Both sides had accepted that if a phase one trade deal came to pass, the U.S. and China would reduce tariffs simultaneously and proportionately.

During the week, there were reports of a phase one U.S.-China trade agreement reaching final stages, prompting gold to become less attractive in the short term,

Gold prices dipped last week in response to news of an imminent trade deal. On Saturday, US President Donald Trump said that talks were moving along “very nicely,” but that a deal would only be reached if it were right for America.

On Friday, however, President Donald Trump told reporters that he hasn’t yet agreed to remove tariffs on Chinese goods.

The US President Donald Trump on Friday said that reports on the rollback of tariffs on Chinese goods was incorrect and poured cold water on the recent trade optimism. It is worth recalling that officials from both sides said late last week that China and the United it is completed.

Following this uncertain statement, Gold prices edged higher on the first day of a new trading week and recovered a part of the previous session's slide to three-month lows, though lacked any strong bullish conviction.

The not so optimistic remarks, coupled with political unrest in Hong Kong weighed on the global risk sentiment and extended some support to traditional safe-haven assets – including Gold. However, the fact that Trump did not completely rule out a deal with China and left the door open to some tariff rollbacks kept a lid on any strong follow-through positive move.

Volatility and uncertainty are alive and well in the gold space as prices push into positive territory following disappointing comments on trade from U.S. President Donald Trump.

Although prices are still down more than 3% for the week, the gold market is clawing back some ground as prices move modestly higher in conjunction with equity markets falling to session lows after Trump pushed back on proposals to reduce some of the government’s tariffs on Chinese goods.

Now all eyes will be focussed on the Important data during that will be out this week and the following one and will influence gold prices-

• US economic
• Latest consumer inflation figures
• Monthly retail sales data.
• Fed Chair Jerome Powell's two-day testimony on Wednesday and Thursday
• US/China trade headlines
• Chinese data that due next week wherein some economists expect to confirm signs of a moderate recovery that could help risk appetite.
• A recovery for gold is possible in the coming weeks, he said, pointing out that impeachment hearings against President Trump begin in Congress next week in the U.S

In the near term gold looks promising as following key happenings will help in creating a positive outlook for the yellow metal-

• Global economic uncertainty
• Fears over a trade war
• As a safe haven investment by the investor community.
• Slowing economic growth
• Underlying uncertainties
• Banks are dovish on rates, global economic signals are mixed,” he added.
• Ongoing trade disputes between the world’s two largest economies, the US and China
• The intrinsic connection between the precious metal and US dollar prices.

In Prithviraj Kothari’s opinion, Inflation, recession, de-dollarization and many such geopolitical uncertainties are bound to hamper global growth and during that period markets will again move towards gold for diversifying risk and creating a more return generating portfolio.

As sentiments remain bullish for gold, a jump in gold prices is soon expected and this will create a room for gold as an alternate form of investment. But gold will have to defend $1425-1450 before contemplating a move upward.

A Favourable Environment Has Emerged For Gold

US China trade war that gathered lot of limelight last week, seems to be put on a back burner as China said that they will not sign any further deals unless another round of talks happen,. There was a renewed volatility when China issued this statement and DOW fell along.

Gold prices edged higher on Thursday after the European Union and U.K. reached a preliminary Brexit deal, with worries that a deal may not pass a weekend vote in the British parliament and signs of a weakness in the U.S. economy providing support for the haven metal.

Gold’s gains after an initial small sell off suggest that many market participants remain sceptical of this latest Brexit.

Gold has benefited from new safe-haven flows. It hasn’t taken much to push investors back into gold; the latest move was triggered after disappointing retail sales numbers for September.

Investors digested a batch of mostly weaker-than-expected U.S. data, which could cement expectations for interest-rate cuts from the Fed.

• The Philadelphia Fed said its gauge of business activity fell to 5.6 in October from 12 in September
• Economists polled by Econoday expecting a 7.1 reading and a report on industrial production from the Federal Reserve fell 0.4% in September, marking the biggest drop since April.
• Data showed that U.S. housing starts slid to an annual rate of 1.26 million last month from a revised 1.39 million in August
• Initial weekly jobless claims increased by 4,000 to 214,000.

According to some analysts, the disappointing economic data continues to support market expectations that the Federal Reserve will cut interest rates at the end of the month.

According to an unofficial poll conducted with the LBMA delegates, they see gold prices rising to $1658 an ounce, up nearly 11% from current prices.

The LBMA forecast has garnered more attention lately, as their last years forecast has also proved to be fairly accurate.

Last year the conference poll attendees saw gold prices rising to $1532 an ounce.  The bullish outlook came at a t time when gold prices were struggling to hold support above $1200 an ounce. Earlier this summer, expectations of looser monetary policy and rising recession fears helped to rally gold prices more than 20 % for the year, with prices hitting a six year high above $1560 an ounce.

According to reports, this is only the second time in last 10 years that gold has seen a 20% rally. Although prices are off their highs, the gold market is still holding on to a 16% gain for the year.

The signs of a favourable environment for the commodity emerged late last year and have continued to build throughout 2019. Our original thesis is now playing out; we continue to see slowing global growth, a more dovish Fed and real rates below 2% driving demand for the commodity and causing a decoupling in the negative relationship between gold and the U.S. dollar.

Prithviraj Kothari is author of this article. Find more information about Prithviraj kothari.

Gold Continues To Ride The Bulls

Has gold really been the safe-haven asset? Has gold really proved to be a hedge in times of uncertainties? Has the yellow metal been the highest return generating asset in its class?

So let’s see what gold has done since 2001. I have always been telling people to buy gold on dips. In 1981, after gold had made its top above $800 it was pushed back into the bears market wherein it plunged to about @250 by 2001; at that time no one even wanted to hear the word gold. People were shifting focus to other means of investment. But I was quite sure that gold was here to stay and it will soon shift its sentiments to bullish. And it happened. I was expecting gold to enter the bulls markets after a 20 year period. Targets were $3000, and currently, it doesn’t seem to be a far reality.

The gold price tends to rise in times of crisis and as of now, the yellow metal has the potential to go much higher even without a major calamity.
Later then, gold will become the most desirable asset when the central banks restart their QE (quantitative easing) programs in order to avoid devastating recessions. The purchasing power of money will be eroded significantly.

Precious metals enjoyed their second-biggest inflows ever in the week to Wednesday, Bank of America Merrill Lynch said on Friday, as festering trade tensions and global growth woes triggered a rush for safe-haven assets.

This quarter too we saw gold running over the bulls. Gold had a good third quarter, rising 8%. 2 factors that suggest, gold may be set for further rises in the immediate future

Demand- We all know that China and Russia have been the biggest buyers of gold in the past decade. On a quarterly basis, central banks increased their purchases of gold immensely in the first quarter of 2019.

The World Gold Council reports that the first quarter of 2019 purchases were the highest in 6 years, rising 68% above the year-ago quarter.

Early this year the World Gold Council reported that central banks around the globe bought the most gold in 2018 on over 51 years. According to the report, last year central banls bought 651 tonnes (metric) of gold. That is an increase of 74% from 2017.

What can be noted further is that India that was once the biggest consumer of gold, will also be seen buying the yellow metal? But the demand is expected to come not from the central banks, but from the locals. The monsoon this year in India has been higher than usual. This leads to a series of events that will further boost agricultural income and this drive increased purchase of gold.

Furthermore, in China, forward contracts have surged to record highs on the Shanghai Gold Exchange and there has been a build-up in China gold ETF holdings since late May.

Tight the unfavourable duty structure in India has not really been helpful in boosting gold demand, but analysts in the market feel that this issue has been boo timing out and a turnaround is soon expected.

Similarly, physical demand in China has been lacklustre due to high prices. But that too seemed to be fading away, where the rise in demand is soon to be witnessed in the Chinese markets too.

Uncertainties- US and China are expected to hold trade talks on 10th October. Simultaneously Iran is also attempting to have talk initiative with the US but the latter is denying all kinds of talks with Iran s of now.

Thought most banks in China will be shut due to Chinese national holiday, this whole week markets will witness Trump’s impeachments dilemma on one hand and Brexit on the other. Nonetheless, these uncertainties will help in evolving the markets.

A noteworthy point is that worldwide money printing triggered by attempts to stimulate economic activity could lead to a substantial gold price increase.

But one thing that cannot be ignored is that as of now one should wait to buy gold. With bullish sentiments at extremely high levels, I think that this is probably not the best time to buy the yellow metal. We will surely witness some dips and that would be the right opportunity.

Prithviraj Kothari is author of this article. Find more information about Prithviraj kothari.

Upcoming Fed Meet Important For Gold

Last week gold was into a wave-like movement where it crossed the $1500 mark but was pulled down back to $1497 over-optimistic global news.

Gold gained ground during European trading hours on Friday. It then gave up some of those gains early in the U.S. trading session. Gold demand in Europe has been strong in the wake of the ECB’s decision to lower rates and re-launch its sovereign debt-buying program.

Gold prices were range-bound on Friday as monetary easing uncertainties by major central banks supported demand while trade talk optimism lifted other assets, curbing gold’s gains.

The gold prices were on a rise in Europe on Mario Draghi’s loosening moves at the ECB, but was not allowed to stay above the $1,500 level it regained there (indeed it rose to above $1,520 at one stage) and was taken down to $1,498 by the market close in the U.S.  The fall seems to have been due to renewed optimism on some kind of trade talks agreement with China is on the cards after news from, later denied by, the Trump Administration that the U.S. might go easier on tariffs on Chinese imports.

De-escalation of the tensions between the world’s two largest economies (the United States and China) have led investors to take out the money from the safe-haven asset gold and move towards risk assets.

U.S. President Donald Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as he said an “easy” agreement would not be possible.

US President Donald Trump hinted at the possibility of signing an interim pact with China in the meantime until a comprehensive trade agreement can be worked out. These comments added to the recent optimism in the markets surrounding the trade war, shortly after both sides put off additional tariff hikes on each other’s imports.

Even though there was positive news that came in from the US, investors still believe that gold prices are here to stay and will be stronger with time as they fear that some sort of global slowdown is yet to come.

Some key indicators are pointing toward an economic slowdown:

• Despite low official unemployment numbers across the board, jobs growth has slowed to its weakest pace since 2011.
• Despite getting a boost from the Trump tax cuts, corporate earnings growth is now decelerating.
• Copper and other economically sensitive industrial metals are showing relative weakness.
• The Treasury yield curve recently inverted.
• As a result of trade disputes between the U.S. and China, manufacturing activity has slumped to a multi-year low.
• GDP itself it’s slowing. U.S. gross domestic product in the second quarter came in at 2% growth (down from 3% earlier in the year) – it's second-worst showing since President Donald Trump took office.

With fears of a global recession growing, analysts are starting to speculate that central bankers will cut interest rates further in the near future. They usually cut interest rates when growth is slowing in a bid to stimulate demand and then increase rates when the economy is growing in an attempt to control inflation. 

The problem is, since the financial crisis, central banks have been cutting rates aggressively. But these actions have not stimulated demand as expected. The situation has got so bad that some central banks around the world are imposing negative interest rates, which means consumers have to pay to keep their money in the bank. 

The financial world has never before seen such a strange setup, and this is why many analysts are recommending investors buy gold. 

With the resumption of trade talks between the U.S. and China not due until next month, and any seriously peace-making outcome uncertain anyway in our view, we suspect that gold will see another boost.  U.S. financial data is conflicting, but the feebleness of the global economy may well see the Fed taking vigilant measures, including further rate reductions, to try and insulate the U.S. from a global depression.

News that shook the markets on Monday was the attack in Saudi Arabia. Reacting to it, Gold prices jumped 1% on Monday as attacks on Saudi Arabia’s oil facilities dented risk appetite, boosting demand for the safe-haven bullion, while investors waited for clues on monetary easing from major central bank meetings due this week.

The gold price does seem to be under pressure to rise and eventually we do see this thrust driving prices upwards. Much may depend in the short term, though, on the outcome of next week’s FOMC meeting, and the interpretation of the various statements from Jerome Powell. Will the Fed lower interest rates again and, if so, are there further likely reductions ahead this year?

As per our Managing Director, Prithviraj Kothari thinks that the next major wave of move in gold prices will be governed by the outcome of the upcoming Fed meeting.

Gold expected to perform well in 2019

Last fortnight gold fell near two week lows. It was heading for its biggest weekly fall in nearly four months on 28th Feb. A strengthening dollar backed by rising equities created pressure on the yellow metal. Better sentiment on the stock markets and a reluctance by the physical gold investors are weighing on its price.

The dollar favored over the Jobs data and Gross Domestic Product news. This resulted in some long liquidation. The dollar, which gained impetus from better than expected fourth quarter U.S. GDP data, hit a 10-week high against the yen.

Rallies in the dollar were taking their toll on gold much more than they were a few weeks ago which is a clear sign that sentiment towards the yellow metal has shifted.

Just when the sentiment towards the yellow metal shifted, gold prices soared in the past week.  Gold prices soared to their highest level in 10 months on Tuesday, driven by technical buying, dovish central bank commentary and continuing uncertainty as the end of the 90-day trade truce between the U.S. and China draws near.

Just when investors became pessimistic about gold, some developments in the trade war resulted in the yellow metal hovering to its 10 month high on Wednesday mainly due to Fed comments and Equities.

Fed - Looking beyond the dollar’s relationship with gold, the yellow metals prices have been boosted by Fed commentary recently. The markets in general reacted favorably to the dovish tilt adopted by the Fed following its December rate hike.

Equity - Stocks were still climbing on Tuesday with key indices like the S&P 500 and Dow Jones Industrial Average on a steady upward march since the beginning of the year. However, both indices started to struggle early Wednesday as investors awaited the latest commentary from the Federal Reserve.

Gold found further support from job numbers released in Friday.

On Friday, prices got a jolt after a report showed that US hiring last month was the weakest in more than a year. The news helped gold push back above US$1,300 an ounce amid renewed demand for a haven.

Spot gold later settled at US$1,298.30 an ounce, down 1.14 percent for the week.
Gold has been caught in a tug of war. Four straight months of price gains amid economic hand-wringing gave way to losses last month as the US dollar gained traction.

The two main factors that are expected to influence gold in the months to come-

Dollar - Despite the recent strength in the dollar, the U.S. currency is expected to weaken “noticeably.” When that finally does happen, it should boost gold prices further—if the usual negative correlation between the two assets returns. They believe “a fair amount” of the greenback’s length has been removed but still see it as “structurally overvalued.”

Central Bank buying - central banks, especially Russia and China, have boosted the share of gold in their foreign reserves. Other analysts have also pointed out this same thing recently. The World Gold Council estimated a 74% year-over-year increase in this “official sector demand” in 2018.

Short term factors like US economic numbers and long term including a more dovish U.S. Fed, U.S.-China trade war, Brexit, Italian recession, fear of global economic slowdown, equity volatility, and increased central-bank buying are expected to push gold higher and help it   perform well in 2019.

Time to buy gold will arrive soon

So far this week looks good for gold as we saw its prices edging higher in Thursday In Asia and it traded near a 5 month high amid U.S. yield curve inversion.

The yield curve inversion triggered concerns about economic growth and a dollar sell-off recently. The two-year/10-year spread was at its flattest this week in more than a decade amid a sharp fall in long-term rates. A flatter curve is seen as an indicator of a slowing economy.

Any slower pace in the economy adds to negativity in growth. This has put pressure in the dollar and further strengthened gold prices. The greenback came under pressure last week when the market took comments from Fed chairman Jerome Powell as signalling a slower pace of rate hikes. Markets still expect the Fed to move forward with a quarter-point hike this month but have interpreted cautious remarks from policymakers to mean that further tightening in 2019 will have to be re-evaluated on economic and inflation data and hence the pull in prices has not been that high.

Furthermore, uncertainty prevails in the market over the upcoming Federal Reserve policy decision, as the Dec. 18-19 meeting looms just over the horizon.

On Wednesday gold hit a high of $1243 an ounce and plunge back to $1233. Though we have gold price moving up this year but the trading range has been sideways because it doesn’t stay at the peak for a long time.

Hence it has been containing most of the price especially since the 11th of October, between 1212 and 1243.  Gold bulls will need the Fed to halt its raising interest rate programme to see a major reversal in the price of gold. Once the Federal Reserve ends the tightening cycle, the time to buy gold will be near

So we can say that if the bulls keep running for gold then it will pick momentum from ere and will be seen crossing the $1243 territory and hopefully cross the July highs of $1257 an ounce.

The coming year looks positive for gold because the dollar is expected to weaken, US treasury yield might be lower, Chinese Yuan expected to recover and demand for jewellery predicted to rise.
And if all falls in place for the bulls then one wouldn’t be wrong if he expects gold to touch the $1400 level.

Investors stockpile gold

Gold witnessed a series of events in the past week which ultimately proved fruitful for gold. Gold was highly influenced positively by a series of following key events:

1. Globally, equities markets plunged down sharply.
2. Uncertainties over the results of the U.S midterm, elections. At the moment there appears to be a strong chance of the Democrats gaining a majority in the House of Representatives, but the Republicans comfortably holding on to their Senate majority. Such a scenario would probably be gold-positive in that it would lead to political gridlock.
3. Trade war between China and US which was initiated by the implementation of tariffs on Chinese goods by the US governments
4. Uncertainty in Europe over the fallout from a possible no-deal scenario for Brexit, 
5. Nervousness over the forthcoming Italian budget which threatens to challenge the Euro zone hierarchy 
6. Geopolitical fallout from the Khasoggi murder which could upset Middle Eastern alliances.

Apart from the ones mentioned above, we still expect some geopolitical difficulties to occur, which may further strengthen gold and help it in breaking its comfort zone.

Gold has been back above $1,200 an ounce for the last two weeks, helped by safe-haven buying due to weakness in global equities and geopolitical tensions. Last week, Gold rose to test monthly highs near $1,240/oz but lost strength and pulled back. The retreat from the top, continued after the ECB meeting and during the American session, amid a stronger US dollar against majors and despite an improvement in risk appetite.

When the yellow metal crossed $1200 mark, it saw many investors retuning to the market with a great interest in gold. Retail buyers have started making their purchased as they expect a further price rise. Further, the investors’ class is also taking some stock profits as Wall Street volatility increased and they’re moving some of those profits to safer or more opportune areas, including gold and silver.

It’s not only the small investor class but also major central banks that are adopting gold. Russia and China have also been trying to win support from global governments to create a new gold-backed currency, thereby removing the US dollar as the world’s reserve currency.

Gold’s impressive performance of late, coming amid USD [U.S. dollar] strength, suggests that gold finally is behaving like a safe-haven asset.  There has been a pickup in gold purchases by central banks, including Hungary, Poland, India, Turkey and Mongolia, in addition to regular gold buyers Russia and Kazakhstan. And if this continues we will soon see gold at record highs.

As dollar strengthens, the yellow metal weakens

Spot gold was up 0.1 percent at $1,318.52 past week, not far from a low of $1,315.06 hit in the previous session, it’s weakest since March 21.

The metal was on track to finish the week down more than 1 percent for its second consecutive weekly decline and the biggest weekly drop in four.

The strength of the U.S. dollar - combined with the weakness of the euro zone currency after (ECB chief) Mario Draghi’s speech - is pushing down the yellow metal.

The dollar hit a 3-1/2-month high against a basket of currencies on higher U.S. yields while the euro was hampered by a dovish tone from the European Central Bank. On Wednesday the benchmark 10-year Treasury yield reached its highest since January 2014 at 3.035 percent. A rise in U.S. bond yields pressures gold by reducing the attractiveness of non-yielding bullion, which is priced in dollars.

Thursday’s trading started on a weak footing, but most of the metals ended the day in positive territory, which suggested dip buying and support are features of the market. Precious metals prices were little changed on Thursday morning, with gold and silver prices off by 0.1% – with the former at $1,316.54 per oz. Meanwhile, the platinum group metals were both up by 0.1%.

Gold continued losing ground through the early NA session and is currently placed at fresh 6-week lows, around the $1312-11 region.

After Friday's corrective bounce, resurgent US Dollar demand was seen as one of the key factors weighing heavily on dollar-denominated commodities - like gold at the start of a new trading week.  Gold prices retraced upward in what looked like a correction after higher and sent the yellow metal to a one-month low.

Easing geopolitical concerns and the strengthening dollar index are the factors which are creating the sell-off. This rise in the dollar seems to be weighing on gold and is likely to be a headwind for metals’ prices generally.

Recent increases in geopolitical tensions and rising commodity prices, especially oil, seem to have spurred inflationary concerns that have led to stronger bond yields and in turn that has lifted the US dollar, with the dollar index at 90.97. This has broken above the previous peak at 90.94 from March 01.

At their summit on Friday, North Korean leader Kim Jong Un  and South Korean President Moon Jae-in declared they would take steps to formally end the 1950-53 Korean War, which ended only with a truce, and work towards the "denuclearisation" of the Korean peninsula.           

North Korean leader Kim Jong Un and South Korean President Moon Jae-in on Friday declared they would take steps to formally end the 1950-53 Korean War, which ended only with a truce, and work towards the “denuclearisation” of the Korean peninsula.

The signs of detente in the North Korean conflict are ... contributing to the lack of solid demand for gold as a safe haven at present

Further as tensions o the Korean peninsula eased, the European shares rose after a positive session among Asian stocks overnight. The dollar index rose 0.2 percent on Monday, 30th April, holding just below its strongest since mid-January.

Gold fell at the start of this week, pulling back towards last week's more than one-month low as easing tensions on the Korean peninsula boosted appetite for assets seen as higher risk, such as stocks, and lifted the dollar.
   
The metal slid 1 percent last week on the back of a stronger dollar and a rise in Treasury yields to above 3 percent, which weighed on interest in non-interest bearing assets. On Thursday, it hit its lowest since March 21 at $1,315.06 an ounce.

That has left it on track to end April down 0.5 percent, erasing all the previous month's gains.
Spot gold was down 0.4 percent at $1,316.15 an ounce during trading hours.
   
Meanwhile, the Fed’s favoured PCE inflation gauge is expected to put core price growth at a 13-month high of 1.9 percent.

The latter would put the Fed within a hair of at least ostensibly meeting its dual objectives. Policymakers aim for inflation of 2 percent to be sustained in the medium term – abating the significance of a single month’s reading – but another sign of steady progress may reinforce the case for tightening.

Gold may return to suspicion, if this materializes as the prospect of higher rates sustains the US Dollar, undercutting demand for non-interest-bearing and anti-fiat assets.