GOLD 0.51% $1,391.7 gold futures

gold carry and interest rates

  1. 4,356 Posts.
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    Am I right in suggesting that a drop in UK rates is bad for the gold carry trade?
    I assume gold is only borrowed as a "carry" if the funds can be invested into a higher yielding asset....what if there is nothing yielding higher than the cost of leasing gold? Does that mean the gold carry becomes unprofitable? And does it mean that there maybe some pressure on those players who dabble in this arena to buy back the borrowed gold? It would certainly explain why lease rates have started to drop and why Comex OI is dropping...it may also explain why gold is bought up towards the end of the London trade via the LBMA and sold in Comex as they sell their long hedge .....
    Comments please
 
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