Posts belonging to Category Gold

Gold closes at nearly 7-year high

Gold is a traditional haven asset

Gold futures on Monday marked their highest settlement since April of 2013, as the killing last week of a top Iranian military commander, Qassem Soleimani, reverberated through financial markets, momentarily upending appetite for assets considered risky and boosting traditional haven assets like gold.

February gold GCG20, -0.13%  on Comex added $16.40, a gain of 1.1%, to settle at $1,568.80 an ounce, after it briefly touched $1,590.90 in intraday action. The most active contract saw its highest settlement since April 9, 2013, according to FactSet data. Gold also rose for a ninth consecutive session, its longest period of straight gains since an 11-day streak that ran from December 2018 to January 2019.

Digital yuan nears launch

China sweats over Libra

China appears on track to launch a sovereign digital currency next year, becoming the first major country to do so, as Beijing aims to track money flows more closely and combat planned cryptocurrencies such as Facebook’s Libra.

With work completed on conducting research and setting standards for the virtual yuan, the next step involves choosing a region for a test launch, Fan Yifei, deputy governor of the People’s Bank of China, said at the end of November. A month earlier, former Chongqing Mayor Huang Qifan told a Shanghai forum that the PBOC was likely to be the world’s first central bank to launch a digital currency.

Digitizing the yuan should lighten the workload for banks by reducing cash circulation, but the move also lets Beijing tighten scrutiny of international transactions and promote the use of its currency on the global stage.

The virtual yuan additionally looks to serve as a preemptive strike against Libra, a cryptocurrency backed by major companies like Facebook that has Beijing worried both about capital outflows and about losing more ground to the dollar.

Safe Heaven Gold Attracts Investments

Decelerating global economic growth

Global commodity markets witnessed volatility last week, during which CME gold futures hit a fresh six-year high of $1454.40 per troy ounce and silver rallied to 13-year high of $16.63 per troy ounce. Silver is outperforming gold after breaking a key resistance of $15.00 on CME, which has resulted in fall in gold/silver ratio to below 86 from an all-time high of 93.45 in June.

A global economic slowdown and an International Monetary Fund (IMF) report that US Dollar was overpriced by 6-12 percent weighed on the equity and currency markets, pushing gold and silver prices to multi-year highs.

The Federal Reserve left its key interest rate unchanged

Rate cuts are on the way

The Federal Reserve left its key interest rate unchanged Wednesday but signaled that it’s prepared to start cutting rates if needed to protect the U.S. economy from trade conflicts and other threats.

The Fed kept its benchmark rate — which influences many consumer and business loans — in a range of 2.25% to 2.5%, where it’s been since December.

It issued a statement saying that because “uncertainties” have increased, it would “act as appropriate to sustain the expansion.” That language echoed a remark Chairman Jerome Powell made two weeks ago that analysts interpreted as a signal that rate cuts were on the way.

Why gold is plunging

Gold is supposed to be a haven

Why has the price fallen lately? Simply put, it’s the strong US dollar.

Expectations for more interest rate hikes by the Federal Reserve have helped lift the value of the currency.
A stronger dollar often is a bad thing for gold because it makes the metal more expensive for international investors.

Stocks or Bonds: What Happens When Rates Rise?

Basic rules

Although there are no specific rules about how bonds and dividend-paying stocks respond to rising interest rates, there are some broad tendencies you may want to consider, suggests Mary Ann Bartels, head of Merrill Lynch Wealth Management Portfolio Strategy.
With bonds, the “coupon rate” is the interest rate that an issuer uses to calculate regular interest payments to investors. The longer the term of a bond, the higher the coupon is likely to be; you’re paid more to wait longer to get your principal back. Higher risk, too, affects the coupon, with high-yield bonds from less solid companies offering more generous interest payments than you’ll get from higher-rated corporations or from U.S. Treasury bonds.…  Febuary 23, 2018

What is the future of Money?

Bitcoin, Dollars or Gold?

Type “Bitcoin is a Bubble” into Google and you’ll get 31,800,000 results, a clear indication of how many times people have, incorrectly so far, called a top in the price of the worlds most famous cryptocurrency. We’ve been studying it for years and have summarised our thoughts in a detailed report; “Bitcoin, Dollars, Gold: What is the Future of Money”
We see numerous potential tailwinds for Bitcoin, and for blockchain especially. Capital is flowing into the sector, millennials love it, and we also think governments and commercial banks are supportive of digital currency, as they have a general disdain for physical cash. Blockchain’s potential to disrupt multiple industries is also another tailwind. For those who want further evidence of its potential, we suggest reading “Banking is only the Beginning: 30 Big Industries Blockchain Could Transform”.
Finally, for as long as central banks the world over engage in the monetary largesse we’ve become accustomed to in the “post” GFC environment, more and more people will look for alternative monetary solutions.… Mon., 04  December 2017

BREXIT will hit strongly The City

Brexit may lead to half of City’s EU workers leaving UK

More than half of EU nationals currently working in investment management in the UK are not confident they will continue working in the country after Brexit, a report from the CFA Society UK reveals.
CFA UK’s survey of 1,100 professionals found that City workers regardless of nationality feel their job security is under threat as a result of Brexit, with just 43% of EU nationals and 52% of non-EU international employees feeling their job is secure. By comparison, 60% of British national respondents feel that their job is secure. According to CFA UK, the respondents’ views “are likely to have been impacted by their sense of job security in the current climate”.…  Wed.,  18  October 2017

US futures are down sharply

North Korea’s missile launch over Japan is hitting global markets

North Korea launched a ballistic missile that passed right over Japan, and that’s set markets on high alert, with four big movers. U.S. stock futures were a big early mover, with the Dow Jones industrial average mini futures dropping as much as 147 points to 21,644 in a knee-jerk reaction. That compared with the index’s close on Monday at 21,808.40. The DJIA futures later regained some lost ground, trading down 109 points at 21,682 at 10:02 a.m. HK/SIN.
Perhaps counterintuitively, Japan’s currency move higher — because it generally does well when nervous investors are looking to park their money somewhere secure. It climbed against the greenback, with the dollar fetching as little as 108.32 yen in early Tuesday trade, down from levels approaching 111 yen earlier in the month.…  Tue.,  29  August 2017

Tensions with North Korea worry markets

Wall Street swings lower after Trump warns North Korea

U.S. stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after U.S. President Donald Trump vowed to respond aggressively to any threats from North Korea. After scaling back from record highs earlier in the session, Wall Street’s three major indexes dipped after Trump said North Korea “will be met with fire and fury” like the world has never seen if it threatens the United States. “Trump’s response was aggressive and that’s why the market turned lower,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities.

Japan said on Tuesday it was possible that North Korea had already developed nuclear warheads and warned of an acute threat posed by its weapons programs as Pyongyang’s continues missile and nuclear tests in defiance of U.N. sanctions. Investors, who took the North Korea report from Japan in their stride earlier in the day, lost their appetite for risk after Trump’s comments to reporters during his vacation at his golf club in New Jersey.…   Wed.,  09  August 2017

Trump declares Currency Wars

Which countries are ‘manipulating’ the markets

Donald Trump’s top trade adviser Peter Navarro launched a broadside at Angela Merkel this week, accusing Germany of profiting from a “grossly undervalued” currency. At the same time the President said countries such as Germany, China and Japan are responsible for “global freeloading” in part due to their weak currencies. Trade relations are top of the new President’s list of concerns, as he blames other nations for, in his view, unfairly luring manufacturing jobs away from the US. … Fri.,  03 February 2017

Gold up as Trump policy worries

Gold inches up on weak dollar 

Gold prices crawled higher on Monday on a weaker dollar and as uncertainty over US policy under President Donald Trump stoked safe-haven demand, although the gains were curbed with many in Asia on holiday for the Lunar New Year. Trump’s administration had on Sunday tempered a key element of his move to ban the entry of refugees and people from seven Muslim-majority countries in the face of mounting criticism and protests in major American cities. … Wed.,  01 February 2017

Dublin will be Barclays EU Headquarters

Barclays Picks Dublin as Post-Brexit EU Headquarters

Barclays Plc has settled on Dublin for its main hub inside the European Union after Brexit and is planning to add about 150 staff there if U.K.-based finance companies lose easy access to the trading bloc, according to people with knowledge of the decision. The bank started scouting the city for office space this month and has been in contact with Irish regulators about expanding its operations, said the people, who asked not to be identified because the plans aren’t public. Barclays is moving ahead with contingency plans so it can continue serving EU clients if Prime Minister Theresa May fails to strike a transitional or permanent deal preserving London’s access within the two-year renegotiation period. … Fri.,  27 January 2017

Bloomberg added Bitcoin to its list of safe havens

The world’s biggest bitcoin wallet provider will have a record month thanks to Trump

The world’s biggest bitcoin wallet provider will “pretty easily” have its biggest ever month for activity in November, following a surge in use after Donald Trump’s shock election victory in the US. Peter Smith, the cofounder and CEO of London-based Blockchain, told Business Insider: “We’re setting a new record pretty much every day since the election in terms of activity on the platform. “People are basically hedging against economic instability”. … Mon.,  14 November 2016

Markets react to the election of Donald Trump as President

US share markets have risen strongly shrugging off fears

The Dow Jones, S&P 500 and Nasdaq indexes all rallied robustly during the day and closed more than 1% higher. The pre-open future markets forecasted dramatic sell-offs when Donald Trump’s lead became clear overnight. Share traders had expected Hillary Clinton to beat Mr Trump to become the next US president.
His victory initially sent money flowing into safe haven stocks, gold and currencies including the yen, but as the day has gone on global markets have recovered.  The Dow Jones ended the day up by 1.4% at 18,589.69. The S&P 500 was 1.11% higher at 2,163.26 and the Nasdaq was also up by 1.11% at 5,251.07. In London the FTSE 100 index dropped 2% at the start of trading before recovering to end the day 1% up. … Thu.,  10 November 2016