The latest Fed vs Trump narrative pushed gold all the way to $3,500 an ounce on Tuesday. Markets seemed to be under the assumption that the US president was moments away from dissolving the entire organisation, but alas it was not to be. Late last night, Donald Trump made it clear he had “no intention of firing him”, referring to Fed Chair Jerome Powell. Gold dropped significantly following the statement and is now struggling to pick a path this morning.
The volatility in precious metals extended to currencies, resulting in erratic movements across all major pairs. The Dollar gained on the latest developments, in particular detriment to the Swiss Franc, which fell a massive 1.9% against the Greenback yesterday. Despite the recent show of strength, the DXY remains below 100 and the Dollar is still near multi-year lows. Just as with gold, currencies cannot seem to commit to one direction or another so far today.
Fundamentals matter very little in the current environment and for the time being financial markets remain at the mercy of the Whitehouse. For once, this suited cryptocurrencies, which were thrilled to witness the new SEC chairman Paul Atkins sworn in on Monday. Trump stated that Atkins was “the perfect man” to lead the SEC, adding that crypto markets were desperate for “regulatory certainty and clear rules of the road”. The previous SEC chairman, Gary Gensler, had been notoriously hostile towards the fledgling industry. The new appointment is unanimously viewed as a move in the right direction. Bitcoin blasted all the way to $94k late last night and the broader crypto sphere is now catching up. Far too early to call for alt season, but it is refreshing to see some optimism for once.
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