Strong reversal in gold prices & treasury yields likely

The vaccine is coming but it maynot be imminent and we could see a strong reversal in gold prices and treasury yields, says Peter Cardillo.

ETMarkets.com
ET Spotlight
Emerging markets are going to follow the global markets and the global markets have acted quite positively to the election results, says Peter Cardillo, Chief Market Economist, Spartan Capital Securities.

Looks like we are closer to a Covid-19 vaccine. Is it right to get too optimistic about it?
The market overreacted to that news because even though it is really good news, there is no question that the market in the pre-market session was higher and it was higher because of the election effect. Obviously the markets were applauding the fact that Biden had won the elections. But when the vaccine news came out, it took everyone by surprise. Of course, it is still on the trails and it needs to be presented to the FDA which means that we could go at least another six to seven months before the vaccine will be available. So it is good news but I do believe the markets overreacted.

Coming to the US political situation, US Attorney General William Barr told the Federal prosecutors to look into substantial allegations of voting irregularities. That will also weigh on the markets?
Well there is no question that it will be a contested election. The Trump team has already begun a process to begin recount in certain states but unless the Supreme Court acts in favour, I doubt it is going to be a problem for the market. That is not to say that the market is not going to be subject to the Senate vote. If the Republicans lose the Senate, then we could be in for a bumpy ride.


What are your views on the emerging markets? Also, what about gold and crude?
Emerging markets are going to follow the global markets and the global markets have acted quite positively to the election results.

In terms of gold, the price of gold was down 5% and that was due to the vaccine news. But I want to caution that today’s decline was overdone and another reason for it was also the fact that we had a rally in treasuries. The ten-year bond is not far away from the 1% mark and that is all due to the enthusiasm over the vaccine which has led people to think that a cure is around the corner.

I would be very cautious because I do not think it is imminent and we could see a strong reversal in gold prices and in treasury yields.
ADVERTISEMENT
ADVERTISEMENT
READ MORE

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+