Gold inter-market: Fresh round of central bank easing to push gold higher

Gold extends its winning streak into a fourth-day on Monday, now pushing towards two-year highs reached last week, mainly driven by increased expectations that the global central bankers’ will announce fresh stimulus measures in the wake of Brexit-led economic fallout. The renewed speculation boosted the rally in the US equities (S&P 500), while at the same time, fuelled the demand for gold as the ultimate store of value.

Among the intrinsics that can be seen as the catalysts behind the latest upmove in gold, the USD/JPY price-behaviour is the other intrinsic justifying the gold’s rally beyond 1350 levels, apart from the US equities. While the VIX (volatility index) and US 30-year treasury yields almost trade out of sync with the yellow metal.

The Fed Funds Futures contracts is likely to undermine the USD performance ahead of FOMC minutes due out on Wednesday, which will help the next leg higher in gold. The CME FedWatch tool shows no chance for a Fed rate hike in July meeting, while the probability of a rate hike by the Fed at its Sept meeting is a meagre 5.9%.