UNITED STATES May 12 2016 1:28 PM
NEW YORK (Scrap register): Mitsubishi is upbeat on gold despite the recent pullback, although at the same time wary of a possible correction in the near term.
Pressure in the early part of the week was the result from a stronger U.S. dollar, despite Friday’s disappointing U.S. jobs report, plus a comeback in equities.
“In our view, the dollar and yield environment should remain supportive of higher gold prices into the medium term and support the uptrend; however, the lack of strong physical demand in Asia right now and perhaps overly bullish investor positioning puts gold in danger of a short-term correction or at least a period of consolidation,” said analysts at Mitsubishi.
According to Mitsubishi, any expectations of a Federal Reserve rate hike in 2016 have been all but priced out of the markets due to renewed worries about the U.S. jobs market after a softer-than-forecast rise of 160,000 in April nonfarm payrolls, the smallest rise since September.
“With U.S. rates likely to remain on hold for longer, the macroeconomic backdrop for precious metals will remain essentially positive for the remainder of the year,” Mitsubishi noted.