Spot gold prices against the US dollar have surged 40% in the last 14 months. 2011's record high of USD 1920 an ounce is again within reach. The cause of the price surge, namely the uncertainty caused by the coronavirus measures, slashed interest rates and central bank cash flood, is not going to abate soon. The fear of inflation is very present, as it would typically cause all other non-real assets to devaluate, making gold even more attractive. Opportunity costs for holding the non-yielding shiny metal are near record low, reflected in negative real yields in the fixed income space. All this caused an unprecedented buying spree with huge flows into gold exposure, physically as well as via exchange traded funds and alike. From January to June, 734 tons of the precious metal flowed into the instruments backed by gold, the industry association World Gold Council reported. Worldwide, the volume in gold ETFs amounts to a record 3621 tons.
The International Monetary Fund (IMF) watches with care the rising pile of debt in both advanced and emerging economies due to coronavirus stimulus spending. It urges countries to tackle fiscal reform once the pandemic fades out. According to the IMF official Mitsuhiro Furusawa, it is the first time ever that global public debt is rising to above 100% of combined global GDP after governments responded to the health crisis.
Machinery orders in Japan unexpectedly rose in May after corporate profits have been hit from the coronavirus pandemic. The increase in headline orders was caused by demand from the services sector, hiding a plunge in external orders and manufacturing orders. This clouds the outlook for the Japanese export-reliant economy. Core orders rose 1.7% in May after a 12.0% slump in April, the quickest drop since 2018. Overseas orders sank 18.5% in June to the lowest level since 2010. Japan slid into recession in the first quarter as the pandemic measures added to woes for firms and households already staggering from last year’s tax hike and insufficient global demand.
After months of discussion, the European Commission has approved the German Corona Rescue Facility WSF, “Wirtschaftsstabilisierungsfonds”. As a result, the Federal Republic of Germany now has EUR 600bn at its disposal to stabilize the economy, according to the Ministry of Finance and Economics. Talks with individual large German companies have already been held. The European Commission would have the competence to prevent distortions of competition and unequal state participation.
|14:30||USA||Initial Jobless Claims||1 427 000|
|01:50||Japan||Core Machine Orders (Private Sector)||-12%|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: David Wolf, +41 44 250 83 48, E-Mail: firstname.lastname@example.org
Source: LGT Bank (Switzerland) Ltd.
Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.