Gold is lower in dollars today despite increasingly dovish signals from the Federal Reserve, ECB, Australian central bank and other central banks as economies slow.
Gold has surged higher in Australian dollars again this week and reached a new all time record high in the Aussie dollar yesterday at $1,974/oz. This is due to concerns about the Australian economy, the likelihood of interest rate cuts Down Under and the negative outlook for the Australian dollar.
Gold remains just off 14-month highs at $1,344.90 per ounce due to the likelihood that central banks will again loosen monetary policy because of the very uncertain geopolitical and economic outlook – particularly regarding global trade.
Stock markets globally remain near two-week highs today and have again been lulled into a false sense of security as speculators bet on a wave of central bank stimulus globally. There are increasing signs that there may be interest rate cuts as early as July in the slowing United States and the euro monetary zone.
Risk assets remain ‘irrationally exuberant’ partly due to President Mario Draghi’s significant ‘about turn’ on monetary policy easing. In one of the biggest policy reversals of his 8 year tenure, Draghi said the ECB would ease again if inflation fails to increase.
Central bankers desire for inflation is very bullish for gold. There has already been massive inflation seen in asset markets and particularly the price of stocks, bonds and of course property. The risk is that the ‘inflation genie may get out of the bottle’ and as economies slow, this creates the real risk of stagflation.
Interestingly, there has been a noticeable increase in new clients from Australia in recent days and a pick up in demand for storage from existing clients. We have a smattering of Australian clients and take payment in Australian dollars. They own bullion coin and bar assets stored with us in Secure Storage in Zurich, Hong Kong and Singapore.
We believe the all time record high of gold in Aussie dollars yesterday (nominal high and not inflation adjusted) will be seen in other currencies in the coming months.
LBMA Gold Prices (AM/ PM Fix – USD, GBP & EUR)
18-Jun-19 1344.55 1341.35, 1073.22 1070.67 & 1201.89 1198.09
17-Jun-19 1333.20 1341.30, 1059.49 1065.13 & 1188.81 1193.09
14-Jun-19 1352.45 1351.25, 1069.79 1070.33 & 1200.03 1201.80
13-Jun-19 1335.80 1335.90, 1054.21 1052.69 & 1182.85 1184.81
12-Jun-19 1336.65 1332.35, 1049.27 1045.76 & 1179.99 1177.26
11-Jun-19 1322.65 1324.30, 1040.53 1041.30 & 1168.96 1170.42
10-Jun-19 1328.60 1328.60, 1046.94 1048.66 & 1175.41 1175.94
07-Jun-19 1334.30 1340.65, 1049.16 1052.14 & 1184.19 1184.60
06-Jun-19 1336.65 1335.50, 1053.15 1051.17 & 1189.62 1185.92
05-Jun-19 1337.75 1335.05, 1052.01 1049.22 & 1185.38 1184.99
04-Jun-19 1323.60 1324.25, 1045.51 1043.77 & 1177.47 1177.26
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