Gold Above $1,800. What’s Next?

By Recep Tosun - May 11 2021 08:56:40pm

GOLD jumped above $1,800, and it’s the disappointing jobs data that added fuel to the fire.

The gold market is a funny place. On Thursday (May 6), I complained that the yellow metal couldn’t surpass $1,800:The price of gold has been trading sideways recently as it couldn’t break out of the $1,700-$1,800 price range. This inability can be frustrating, but the inflationary pressure could help the yellow metal to free itself from the shackles.

And voilà, just later that day, the price of gold finally jumped above $1,800, as the chart below shows. Hey, maybe I have to complain about gold more often?



But jokes aside. The move is a big deal, as gold has finally broken above the key resistance level. What’s important here is that the breakthrough wasn’t caused by some negative geopolitical or economic shock, but rather by fundamental and sentiment factors.

So, what happened? First, there is a weakness in the U.S. dollar. With global economic recovery progressing, the safe-haven appeal of the greenback is simply vanishing. Another issue here is – and I pointed this out in the Fundamental Gold Report dedicated to the latest ECB’s meeting – that the pandemic in the Eurozone has reached its peak. So, the worst is already behind the euro area, and it can catch up with the U.S. now, supporting the euro and gold against the dollar.

Second, bond yields have been heading lower recently. As one can see in the chart below, the real interest rates have corrected significantly since their peak in March. In early May, the 10-year TIPS yields slid further, returning to almost -0.90%.

Week Ahead: Stocks To Continue Climbing On Ongoing Easing; USD At Crossroads

By Recep Tosun - May 08 2021 09:08:56pm

Germany produced 8.47 million tonnes of meat in 2020, 1.6% (142,000 tonnes) lower compared to 2019, according to data released by the Federal Agency for Agriculture and Food (BLE ). In addition, meat exports and consumption of meat products also fell.

By sectors, pig meat production decreased by 2.4%, to 5.11 million tonnes. That of beef fell 2.7%, to a total of 1.09 million tonnes. Poultry meat production, however, increased by 1.7%, reaching approximately 1.64 million tonnes. Compared to 2019 and measured in carcass weight, imports of animals -especially pigs- decreased in 2020 by 14, 8%, reducing exports at the same time by 11%.

Trade with other countries also decreased, both for meat and for canned food and meat products. Thus, imported quantities were reduced by 7.8% compared to 2019, reaching the figure of 2.57 million tonnes. Exports, meanwhile, decreased by 6.5%, to 4.01 million tonnes. Likewise, BLE analysts indicate that, according to available data, the degree of meat supply in Germany in 2020 stands at 117.7%, thus maintaining practically the same percentage as the previous year. The degrees of supply of the different meat subsectors stand at 125%, in the case of pig meat, 94.6% in beef, and 97.2% for poultry meat. The lowest degree of supply was registered, with 40%, in the sheep and goat meat subsectors.