Negative global real yields to prevent rout in Gold

UNITED STATES August 11 2016 9:37 AM

LONDON (Scrap Register): Real bond yields in negative territory for much of the world should provide a floor under the gold market even if the yellow metal slides some more on increased expectations for a Federal Reserve rate hike, said TD Securities. 

The metal fell back after Friday’s release of the monthly U.S. jobs report. The better payrolls report has some in the markets speculating that the Fed now has more ammunition to act on another rate hike, even as early as September, TDS added.

This is still a weak call, with muted probability, but it seems rather the expectations for December have certainly jumped out.

Still, TDS later added that, “despite the growing concerns about another rate hike in the U.S., global real yields continue to fall further in negative territory and that will keep the case for owning gold (and silver) in the portfolio, and thus preventing any rout from occurring. The real yield refers to the nominal interest rate minus the inflation rate.