Gold Achieves Liftoff as Prices Rocket Toward $1,400 an Ounce As Fed Rate Cut Probability Increases

(Bloomberg) Until this month, gold held claim to the title of being one of the most boring asset classes. Prices barely budged and popularity was fading.

Now that’s all changed. Over the past few weeks, a clear bull case has started to emerge. A key resistance level has broken. Investors are pouring money into exchange-traded funds. The dollar is weakening and the Federal Reserve seems to be charting a path to cut interest rates. China is on a buying spree to stock up reserves.

“It has been a long wait,” said Mark O’Byrne, research director at GoldCore Ltd. “Gold has finally broken out, we nearly touched $1,400.”

Gold rose as much as 2.5% Thursday to the highest since September 2013, and traded at $1,381.64 an ounce at 1:03 p.m. in London.

Yes, gold prices are rising as the odds of a Fed rate cut increase.

goldfedssss

The odds of a Fed rate cut (from Fed Funds futures) is 100%. Only the size of the cut is unknown. But it looks like two cuts by September.

ratecuts

It looks like there is a disturbance in the force (or at least Fed Funds 30 day volatility).

fedfundsskw

Look at  the 10 Delta Call at December maturities for gold!

goldskew.png

Gold ETFs are booming again!

goldetfa

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.