Institutions: The frenzy of gold and other precious metals may trigger volatility in the stock and bond markets

Bertram Lai of CGS International pointed out in a report that the continued rise in gold and other precious metals may lead to volatility in the stock and bond markets. He said that gold and other precious metals appear to be in a self-reinforcing feedback loop, and their price action itself has become news driving price movements. This could impact investors’ perception of the risks associated with fiat currencies and could lead to a widening bond risk premium at the longer end of the yield curve. He added that if bond risk premiums are substantially repriced in the coming months, it could trigger a major volatility in equity and credit markets. (Jin Shi)

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