Along with falling volumes, this week gold and silver moved sideways in the last days of June. Gold is trading at $ 1,783, and silver at $ 26.11. A lot has happened with gold’s July Comex options expiration, semi-annual market valuation, and the introduction of the Basel 3 net stable funding rate for European/US banks. Goldmoney has released a new gold report on these.
Goldmoney report: Will the price of gold rise?
Drawing attention to the above factors, the Goldmoney report mentions that the most unknown issue regarding the market is how the market liquidity will be affected in the long term as gold traders reduce their positions. It is noted that the “Swaps” category on the Comex is still full of “short positions” and the net open 167.085 contract status on June 15 is shown in the chart below.
Swap category includes traders based in London. However, the physical liquidity classically protected in Comex was finite for a while. Therefore, the report states, “The hedge of London futures should likely be less than 50,000 Comex contracts. This leaves about 120,000 shorts that need to be closed in an essentially illiquid market.”
According to the authors of the report, there are two possibilities that can come to the rescue of Swaps and allow them to close short situations. First, an early rise in US interest rates and price inflation proving to be “temporary.” But there are problems with this theory. According to the authors, the Fed is more likely to resist raising rates before then. In this case, the report states that “the price of gold is likely to rise before interest rates rise, and even then, the expensive metal will go higher if the Fed funds rate hike fails to meet market expectations for increases.”
What awaits Gold investors in the second half of 2021?
The report cites investor ignorance about the relevance between high interest rates and the price of the expensive metal as another problem with rising interest rates. The second possibility is that a weakening dollar will undermine the stock and bond markets. The report also mentions that stocks are in a bubble. “It is not possible to overestimate the possibility and extent of these two possibilities affecting the gold price.
However, it is reasonable to bear in mind that, despite the clear trend in dollar hyperinflation, the impact on the gold price in the second half of 2021 may be unexpected at times,” concludes the report. For more gold news Cryptocoin. com as ” Gold Price Claim: What to Expect in the Short and Long Term?” You can review our article.
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