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 how the market liquidity will be affected in the long term as the most unknown item to the market, 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 positions on June 15 are shown in the chart below.
The swap category includes traders who also take positions in London. However, physical liquidity traditionally protected in Comex has been limited for some time. Therefore, the report states, “Hedging of London futures should probably be less than 50,000 Comex contracts. That leaves about 120,000 shorts that need to be closed in an already illiquid market.”
According to the authors of the report, there are two possibilities that could come to the rescue of Swaps and allow them to close short positions. First, an early rise in US interest rates and the conviction that price inflation is “temporary”. But there are problems with this theory. The Fed is more likely to resist raising rates before that, according to the authors. In this case, the report states that “the price of gold is likely to rise before the rise in interest rates, and even then, the precious metal will rise even higher if the Fed funds rate hike fails to meet market expectations of increases.”
What awaits Gold investors in the second half of 2021?
The report cites investor ignorance about the relationship between higher interest rates and the price of the precious 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 the stocks are in a bubble. “It is not possible to evaluate the probability 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.” For more gold news Cryptocoin. com as ” Gold Price Forecast: What to Expect in the Short and Long Term?” You can review our article.
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