What Are the Biggest Factors in the Gold Market?

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

Aug. 20 (Bloomberg) -- Bloomberg's Olivia Sterns and Bloomberg Industries' Kenneth Hoffman put futures in focus with an examination of the factors weighing on gold prices, from inflation in India, outflows from ETFs, to Federal Reserve tapering expectations in "On The Markets." They speak on Bloomberg Television's "In The Loop."

Coming into the stock market out of desperation are now dealing with one of the historic facts of the stock market and that is that it is volatile and will always be volatile.

At this point you saeuy that there is going to be something that will happen here, we will see the markets get more messy and you are shorting the equity market.

You have to be very careful but one thing without question tomorrow's celebration of transparency, supposed transparency by the fed, is proving one thing to investors and it is proving that this market has become overly dependent, addicted on the fed.

The problem with in sis there's two scenarios.

First, they taper the market will not like that.

Second, they keep printing and it won't work because it has proven it is not working.

There won't be as big an impact or any impact on more q.e. you say short treasuries and olivia is looking at the flip side which is why you might still want to be a bull on government bonds.

We know treasuries are trading at the cheapest level in nearly two years but one indicator of momentum suggest they could be oversold.

We look at the 14-day relative strength it has crossed above the 70 threshold indicating it may be about to reverse directions.

Last time it topped that level was july 5 followed by a rally.

From a technical perspective this rapid run-up could be perhaps due for a correction.

Could you be in the short term lose out on shorten eded treasuries.

In the short term but there is probably a few hpbd million -- a few hundred trillion in derivatives behind the treasury market.

Bond investors are saying they don't want the yields.

That is why we are getting the exponential moves up in yield and declines in price.

This will continue whether we get a short technical plateau remains it be seen.

But you have so much of the issuance being absorbed by the fed and confidence that investors have with it whether they will continue to do that is waning.

10-year treasury investors lost about 10% with just this move.

Which is pretty big after a 30-year bull market in treasuries.

You are a bull on oil.

You say buy oil.

Julie is watching oil prices.

They sold off to little.

We have had volatility in the past month in oil.

You look at oil and where it is that come it is down 2% to 3% and you see the ups and downs.

A lot of different push and pull factors.

You have supplies, survey for tomorrow showing them shrinking to some extent.

You have expectations for fed tapering feeding into oil prices including downward pressure on oil prices like we are seeing across the spectrum.

Then you are seeing what is happening in north africa.

We are seeing disruption at various libyan oil facilities although some analysts are saying that is having a muted effect on oil prices.

So there are cross currents.

Given that volatility, why buy oil now?

The situation i made the prediction two years ago that there would be a civil war in egypt.

Most of the appreciation of oil has been the result of that civil war.

Keep in mind the suez canal, pipeline crucial to oil transport.

What we have now is a psychological effect of that part of the country being vulnerable and the psychological effect alone causes investors to bid up oil.

So you are saying stay in oil.

Stay in oil.

We have a little bit of room but there will be volatility.

But i see some

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change