Sprott Expert: Gold's Resilience Amid Rising Yields Paves the Way for an Upcoming Rally
Kenny Zhu of Sprott stated that gold's ability to maintain its range and attract new inflows into funds despite rising bond yields indicates its next move could be upward.
Kenny Zhu, Director of Research and Investment Strategies at Sprott, said that gold's ability to maintain its trading range and attract new inflows into its funds despite the sharp rise in bond yields indicates that its next move could be upward.
Zhu bases this on the fact that higher yields usually increase the opportunity cost of holding non-yielding gold; therefore, the price's resilience in this environment is read as a sign of strength, not weakness.
He believes that central banks' continued shift away from dollar-denominated assets remains the core pillar of the long-term bullish case, because these purchases represent a stable demand side unaffected by market fluctuations.
These are Zhu's views expressed in an interview with Kitco News, presented here as an institutional analyst's perspective.
What do these terms mean?
Trading Range: The upper and lower limits within which an asset's price moves over a period of time, used to judge the market's future direction.
Opportunity Cost: What an investor forfeits the chance to earn when choosing to hold one asset over another, such as holding gold instead of an interest-bearing instrument.
Bullish Case: The argument on which analysts build their expectations of a rise in an asset's price over a specific period.
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