Yields, Equities on a Spiral, Gold High

Gold prices reached a one month high as the demand for it increased as a safe bet as equities and Treasury yields made a fall due to concerns over global growth and a likely U.S. recession.

The yields of the 10-year treasury sank to its lowest on Monday and are the least in the past 18 months. Moreover, the yield curve was inverted after the Federal Reserve was dovish. Due to the U.S. Treasury yields tanking to its lowest since December 2017, there were fears of U.S. recession due to low short term interest rates. Not just the U.S., The German 10-year yields also was negative due to the European political climate and Brexit deal hanging. But the positive development in the German economy and the morale of businesses increased as there was hope that the economy will not slip into a recession but avoid it by a small margin. There was more gloom in the British economy as the parliament is looking at ways to come out of the Brexit deadlock after it rejected the deal proposed by Prime Minister Theresa May.

The Australian long-term Treasury yields were also low due to a slump in the property markets. President of the Federal Reserve Bank in Chicago Charles Evans said that the markets are nervous due to the yield curve being flat and going negative but said that the U.S. is not heading for a recession and is confident that the outlook for the economic growth will be achieved.

But despite the confidence shown by the central banks, there is great instability in the global economy due to the U.S. -China trade war, European economy on a downturn and China also staring at a slow economy. Despite the rise in gold prices, the gold and platinum mines in South Africa will suffer job cuts as Eskom has increased the prices of electricity which is adding to the high operational costs.

The Spot gold remained as it was in the previous session and was at $1,321.74 for an ounce after it reached its highest price on Feb. 28 at $1,324.33.

The gold futures of the U.S. also saw a reduction of 0.1 percent which was at $1,320.70 for an ounce. Asia-Pacific broadest index MCSI shares outside Japan was unchanged in early trade after two days of straight losses. Japan’s Nikkei rebounded by 1.1 percent after a fall of 3.0 % on Monday.

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