Talking on Gold & $ Index Chistopher Woods says there is no surprise to Greed & fear that gold should be under pressure in US dollar terms given dollar strength and the almost schizophrenic mood swing engaged in by the Fed since Pivot Powell’s U-turn last November, a mood swing which in Greed & fear’s view can in significant part be explained by political pressures & this is why the real test of Powell’s current hawkishness will only come when the political pressures go the other way. He adds to says that if gold’s weakness this year in US dollar terms does not surprise, much more disappointing was the yellow metal’s failure to rally more last year before the Fed’s U-turn in November when inflation was on the rise and interest rates were becoming ever more negative. Greed & Fear believes still there is no doubt that gold, and higher beta silver, will be the key beneficiaries of any sudden change in Fed stance, be it driven by sudden recessionary concerns and/or a related decision to fudge the 2% inflation target.
Mumbai: Chistopher Woods, Jefferies, in the weekly note Greed & Fear says the 75bp Fed rate hike this week to 3-3.25% was to be expected as a result of the September CPI report and its evidence of stickier than expected core inflation discussed here last week. Talking more on the US inflation, he says over the past week there have been some small crumbs of comfort for those looking for a sign that inflation has peaked. While the five-year forward inflation expectation rate fell from 2.45% in late August to 2.24% on Monday, the lowest level since late July, it has since risen to 2.29%
One continuing negative for gold is demographics i.e in sense of whether millennials will ever have any interest in investing in gold given Bitcoin’s status as an alternative store of value. Greed & fear was therefore interested to hear this week about a World Gold Council initiative called Gold247 as one of the goals of this initiative is to utilise blockchain technology to allow for gold to be traded as a digital asset via tokenisation. Greed & fear finds it hard to abandon the notion that a key part of gold’s appeal is that it is physical & still allowing it to be owned via tokenisation should broaden gold’s appeal to a universe of younger buyers.