© Reuters. Gold: What caused the price gap yesterday, and is the material supply shrinking tomorrow, a crucial day
Jeffrey Smith wrote
Investing.com – Futures fell on Wednesday after recording the largest one-day profit during Tuesday, as bets poured into the future of negative returns on safe havens with yield.
Gold metal futures records at the US midday price of $ 1,633 an ounce, a decrease of 1.59%, while gold in spot transactions is $ 1,615 an ounce.
Thus, in the spot trading, the gap between it and gold in the futures transactions was closed.
And due to the lack of settlement of gold under the COMEX rules, the New York Stock Exchange branch of commodity transactions, futures rose $ 40 above spot contracts. But later on Tuesday, the London Gold Market Association and the Chicago Commodity Exchange were moving to solve the problem.
The London Gold Market Association announced 400 ounces of bullion acceptable in COMEX contracts settlement.
BMO Capital Markets analysts say these moves were a short-term bias in the quotas, not a market imperative.
However, the bottom line here is that what happened was not because of the poor physical supply of gold, which continues to attract portfolio investors, who are moving away from falling treasury bonds and central banks.
Treasury 10-year yields fell from 1.27% to 0.81% in less than a week. The three-month, highly secure bills became negative early in the Wednesday session.
David Tate, of the World Gold Council, says in comments sent by email: “The long-term consequences of deficit trading budgets, negative interest rates and devaluation will be a major player in favor of gold in the future.”
Safe Haven assets are preparing for the largest one-day data series on Thursday, with US unemployment complaints due for the past week.
Analysts expect the number to reach 2 million people, which reflects the collapse of demand in the non-essential services sector.
The Markit PMI was released by Markit on Tuesday, to show that services are responsible for the lion’s share of the labor market. The sector is strongly influenced by the consequences of the Coruna virus, more than the industry.
This highlights the importance of income support measures for stimulus packages, which are currently under review and vote by Congress, and are the best defense against the downturn.
Analyst, Alexander Cozel Wright, from Capital Economics, says in a note to clients on Wednesday that deflation will be the biggest threat to gold now. And he kept expecting the price by the end of the year at $ 1,600 an ounce.
In other news, the metal markets rose on Wednesday, to record levels of 2.3% to $ 14.59 an ounce. While the closure of South African mines pushed the futures up 20%, and rose 2.7% to $ 721.50 an ounce.