DoubleLine Capital CEO Jeffrey Gundlach believes the U.S. dollar is “doomed” over the long term. On Thursday, he told CNBC, “…the dollar is going to fall pretty substantially” due to the size of U.S. trade and budget deficits. In the short term, he said, “…the dynamics have been and will continue to be in place for the dollar to be marginally or moderately stronger.” However, in the long term, he thinks the dollar is “doomed.” In other news, gold prices may have slipped Friday morning, but experts say the precious metal is still on track for its fourth weekly gain.
Gundlach says the dollar is ‘doomed’ over the long term because of rising U.S. deficits
DoubleLine Capital CEO Jeffrey Gundlach offered a dire long-term assessment on the U.S. dollar Thursday, telling CNBC in an interview he thinks the greenback is “doomed.”
“Ultimately, the size of our deficits — both trade deficit, which has exploded post-pandemic, and the budget deficit, which is, obviously, completely off the charts — suggest that in the intermediate term — I don’t really think this year, exactly, but in the intermediate term — the dollar is going to fall pretty substantially,” Gundlach said on “Halftime Report.”
“That’s going to be a very important dynamic, because one of the things that’s helped the bond market, without any doubt, has been foreign buying, with the interest rate differentials having favored hedged U.S. bond positions for foreign bond investors,” he added.
The so-called bond king made his remarks as the U.S. dollar index traded around 92.64 on Thursday, up about 0.25% on the session. The dollar index, which measures the world’s reserve currency against a group of six currencies, was up 3% year to date.
“When it was below about 89, we announced very publicly that we were positive on the dollar for the near term,” said Gundlach, whose Los Angeles-based investment firm has more than $135 billion in assets under management as of March 31.
“It’s a question of what your horizon is,” Gundlach said. “In the short term, the dynamics have been and will continue to be in place for the dollar to be marginally or moderately stronger.”
“In the longer term, I think the dollar … [is] doomed,” he added.
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Reuters via CNBC
Gold dips, but still on track for 4th weekly rise on dovish Fed
Gold prices slipped on Friday due a slight rebound in U.S. bond yields and a stronger dollar, although a dovish stance on monetary policy by the Federal Reserve kept bullion on track for its fourth straight weekly rise.
Spot gold was down 0.5% at $1,819.46 per ounce by 1101 GMT, but was up 0.7% so far this week.
U.S. gold futures fell 0.5% to $1,819.70 per ounce.
“We are back again at $1,820 threshold and are seeing a lack of buying interest from ETF investors. Also, today bond yields are slightly up and dollar is rather steady,” said Commerzbank analyst Carsten Fritsch.
However, the view that Fed will not react to this strong rise in inflation is keeping gold prices above $1,800, he added.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.3% to 1,034.37 tonnes on Wednesday, its lowest in nearly two months.
Benchmark U.S. 10-year Treasury yields edged up to 1.3305% after falling to a one-week low of 1.2920% in the previous session. The dollar index was headed for a strong weekly gain.
This week, Fed Chair Jerome Powell reiterated that rising inflation is likely to be transitory and the U.S. central bank would continue to support the economy, which sent gold prices to a one-month high on Thursday.
Some investors view gold as a hedge against higher inflation that could follow stimulus measures and it also tends to gain when interest rates are low.
If gold closes the week well above $1,800, it would be bullish catalyst for gold in the near-term, said Vincent Tie, sales manager at Singapore dealer, Silver Bullion.
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Yahoo! Finance/Stephanie Asymkos
Expert: It’s ‘a little scary’ for retirees to spend their savings
Retirees often are reluctant to draw on their nest eggs in their golden years, according to one retirement expert, after spending decades saving up.
“[The] reality is that many of us are accustomed to spending less than our income during our working years and then we get to retirement, and it feels a little bit odd spending down our savings,” Michael Finke, an investments and retirement professor at The American College, recently told Yahoo Finance Live. “It can seem a little scary to spend down our savings.”
Finke described why certain people, especially those with flush retirement savings, don’t spend as much as they could as a “puzzle” because their spending sacrifices during the working years don’t seem worth it.
Retirees generally fall into two camps: spenders and non-spenders, Finke said, with research showing that pension carriers are more apt to spend.
“Those who have a pension spend significantly more than those who have the same amount of wealth and investment assets,” he said. “People just tend to leave lesser investment assets sit — they don’t actually spend them.”
Immediately following retirement is when people tend to drop the most cash and “get the most enjoyment from spending,” he explained. After all, it’s when people typically have the most energy to spend money on things like grand vacations and relocations.
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