Gold downgraded to neutral from buy (3 - 6 month horizon)
Comments from HSBC on gold, the analysts saying they don't expect much higher over the next quarter to half year. Here's why.
HSBC kick off with agreement that inflation is transitory:
- Inflation expectations remain elevated but appear to have peaked. We think inflation concerns will be temporary and mild with central banks still committed to keeping loose monetary policy.
- The US 10 Year Treasury yield appears to have stabilised around 1.6% after hitting recent highs of 1.75% at end-March signalling that inflation concerns may be abating for the time being.
And thus, for the yellow rock:
- "Short-term, we have downgraded gold to neutral as we don't expect significant capital appreciation over the next 3-6 months, especially with bond yields still elevated."