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PM Bulletin: Gold
29 Jan 2016
AM Bulletin: BOJ takes rate negative
29 Jan 2016
PM Bulletin: BOJ in focus
28 Jan 2016
AM Bulletin: FOMC disappoints, but earnings offer support
28 Jan 2016
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AM Bulletin: Crude still driving equities
27 Jan 2016
PM Bulletin: Tomorrow’s FOMC meeting
26 Jan 2016
AM Bulletin: Equities slide on crude sell-off
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PM Bulletin: Silver chart
25 Jan 2016
Weekly Bulletin: Promise of further stimulus halts equity slide
25 Jan 2016
PM Bulletin: EURUSD chart
22 Jan 2016
AM Bulletin: Equities rally on ECB and oil
22 Jan 2016
PM Bulletin: Dovish Draghi triggers euro sell-off
21 Jan 2016
AM Bulletin: ECB meeting in focus
21 Jan 2016
PM Bulletin: Crude makes fresh multi-year lows
20 Jan 2016
AM Bulletin: Stocks slide as oil slumps
20 Jan 2016
PM Bulletin: Bank of Canada rate decision
19 Jan 2016
AM Bulletin: Equities surge on relief rally
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PM Bulletin: Crude oil - long-term charts
18 Jan 2016
Weekly Bulletin: China and oil weigh on equities
18 Jan 2016
PM Bulletin: Long-term gold bullion chart
15 Jan 2016
AM Bulletin: More woe from China
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PM Bulletin: Equities: bull or bear?
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AM Bulletin: Investors remain jittery
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PM Bulletin: The Bank’s rate decision
13 Jan 2016
AM Bulletin: Oil rebound lifts stocks
13 Jan 2016
PM Bulletin: Saudi Aramco’s IPO
12 Jan 2016
AM Bulletin: Crude closes in on $30
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PM Bulletin: US Fourth Quarter Earnings Season
11 Jan 2016
Weekly Bulletin: 2016: Trouble ahead?
11 Jan 2016
January: Non Farm Payrolls Out Today
08 Jan 2016
PM Bulletin: Another blow-out payroll number
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AM Bulletin: China effect calms markets
08 Jan 2016
PM Bulletin: Non-Farm Payroll look-ahead
07 Jan 2016
AM Bulletin: Equities slump after 2nd China trading halt
07 Jan 2016
AM Bulletin: Investors remain jittery
06 Jan 2016
AM Bulletin: China steadies and Europe rallies
05 Jan 2016
AM Bulletin: Chinese equities plunge
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 Friday 29 January 2016

PM Bulletin: Gold

 

 

Interest in gold has picked up recently. This is unsurprising given the turmoil in financial markets we’ve experienced since New Year. The rally may putter out just as it did at the end of last summer following the previous round of China-driven chaos. If that were the case, then we could see gold head back to $1,000 per ounce or below. Alternatively, growing financial and geopolitical uncertainty (China, the Middle East, oil, the US Presidential Election, UK Referendum for starters) could mean the lows are already in. 

Earlier today the Bank of Japan (BOJ) took interest rates negative for the first time in its history. The move is designed to persuade financial institutions to seek out higher yields by lending to businesses and individuals and thereby boost growth and inflation. Additionally bank officials made it clear that they were prepared to provide further stimulus if necessary.

On Wednesday the US Federal Reserve delivered its first FOMC statement since it hiked rates back in mid-December. The Committee gave no suggestion that was tuning down its projections for a full 1%-worth of rate hikes for the rest of 2016. But a look at the fed funds futures market suggests a much slower rate of tightening. Certainly, the US dollar (as measured by the Dollar Index) is little-changed since the beginning of the year and the EURUSD is some way off its December lows. 

Last week European Central Bank president Mario Draghi said the bank will "review and possibly reconsider" monetary policy at its next meeting in March. He also reiterated that there would be "no limits" to action to reflate the Euro zone.

Despite all this central bank dovishness, gold looks like ending the week below recent highs. It shot up straight after the release of the FOMC statement coming within a whisker of $1,128. But it has pulled back since and has now broken below its 200-day moving average near $1,120. Now it needs to hold above the 100-day moving average ($1,105) to establish a base for further gains.




It doesn’t feel as if gold is about to take off as it did back in 2009. That was when central banks cut rates to the bone (so it seemed) and launched wave upon wave of quantitative easing. But those same central banks still have balance sheets choc-a-bloc with all manner of debt instruments. And in the case of the ECB and BOJ these could expand further. Who knows what would happen to the gold price if the Fed signalled a slower rate of tightening, or (whisper it) reversed their rate hike?


Disclaimer:

Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

 

Posted by David Morrison

Tagged: Bulletin PM

Category: PM Bulletin


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