Welcome to Orchid’s Gold Weekly report. We discuss gold prices through the lenses of the Aberdeen Standard Physical Gold Shares ETF (NYSEARCA:SGOL).
SGOL is presently pressured by the strength in the dollar and the rise in long-term US real rates ahead of the FOMC meeting on Wednesday, September 16.
Source: FRED, Bloomberg, Orchid Research
While we expect the Fed to confirm its dovish stance by introducing its new policy framework to boost inflation. Nevertheless, we think that the market is presently focusing on the recovery in US economic growth, which should underpin upward pressure on the dollar and US real rates.
September tends to be a negative month for the gold price performance, which leads us to remain cautious for now.
We think that the consolidation in SGOL, which started early in August, is not over yet. That said, we do not anticipate a meaningful downside potential from