Gold Prices Fall as Fed Balance Sheet Hits $8 Trillion, Reverse Repo Surges
GOLD PRICE OUTLOOK:
Gold prices pulled back for a second day as the DXY US Dollar strengthened
Demand for Fed’s reverse repo facility surged to an all-time high, hinting at excessive liquidity conditions that support the case for tapering
The Fed balance sheet hit a record $8 trillion. A slowdown in the pace of expansion may undermine the yellow metal
Gold prices extended lower during Monday’s APAC session after falling 1.14% on Friday, as the US Dollar climbed alongside longer-dated Treasury yields. Demand for the Fed’s overnight reverse repo facility (ON RRP) surged to a record high of $547.8 million on June 11th (chart below), reflecting swelling liquidity at financial institutions. A reverse repo happens when a central bank sells securities and raises cash from the markets in order to provide stability in lending flows. It usually happens when there is too much liquidity (cash) and demand for
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Gold prices retreated from a three-month high as the US Dollar strengthened alongside the 10-year Treasury yield. Wednesday’s US inflation data will be closely eyed by bullion traders.
By: Dave Roos | Updated: May 12, 2021 A sign announces the day s gas prices at a station in Annapolis, Maryland, on May 12, 2021. Fears that the shutdown of the Colonial Pipeline because of a cyberattack would cause a gasoline shortage led to some panic buying. JIM WATSON/AFP via Getty Images
Critics of any president are quick to blame the commander in chief for things that are totally beyond his or her control. (Of course, presidents and their supporters are equally quick to take credit for things that are beyond their control.) The price of gasoline is a perfect example. Donald Trump and his fellow Republicans took credit for low gasoline prices in 2019 [source: Rainey]. And when George W. Bush was in office, Democrats blamed him for allowing gas prices to rise from $1.45 a gallon on his inauguration day to $4.05 a gallon by June 2008 [source: Thaler].