Gold Silver Reports — Gold gained for a second day as crude oil’s slump into a bear market revived fears inflation will continue to undershoot the Federal Reserve’s target, putting at risk policy makers’ projections for monetary tightening.
While crude oil stabilized after Wednesday’s slump, it’s still down about 20 percent this year. The yield on 10-year U.S. Treasuries slipped to 2.1511 percent, near the lowest since November, signaling increasing doubt on the Fed’s ability to cut its balance sheet and aggressively push borrowing costs higher.
“Yields are getting lower and lower and that’s going to push investors into the metals market, specifically into gold,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “With lower crude oil prices, you’re going to see a sector rotation out of energy and into assets like gold. People think the economic data is going to look weaker and the Fed will start to question their stance.”
The “slump in oil prices pushed investors to look at alternatives,” Naeem Aslam, the London-based chief market analyst at Think Markets U.K. Ltd., said in an email. “Given the sharp sell-off in oil, our investors have become risk averse, and this is pushing the yellow metal higher. Another element which is also providing the tailwind is the weakness in the dollar.” — Neal Bhai Reports