In this video we discuss the outlook for the gold price. The video focuses on a piece in a recent edition of the Weekly Macro Themes report. A key chart in the report is the gold price against the shadow fed funds rate and the main point it illustrates is how the monetary tides are going out for gold and that presents a medium term headwind. From a timing or tactical standpoint the gold price is at the upper end of its trend channel and there has been a compression in gold implied volatility, so it's fair to say the shorter-term risks are elevated. Longer term we expect some mean reversion in real yields, which will also act as a medium term headwind to gold prices. Thus we have a bearish bias medium term and are cautious on the near term outlook. One thing worth noting however is the link between gold and the "monetary policy tides" is that gold will likely perform well in the next crisis or downturn as the Fed will likely turn the QE taps back on.
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