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Gold sees heavy profit-taking after record high new

Heavy profit-taking crushed bullion prices late last week. Gold almost reached a new record high on Friday but eventually thought better of it and instead elected to nose-dive to $2,882 an ounce – a 1.5% drop. The price action in silver was even more bewildering, initially climbing to a multi-month high of $33.39 before plummeting back down to $32.11. It is worth mentioning at this point the developing story surrounding the apparent gold shortage in the London vaults. The threat of tariffs has prompted a flight of physical gold from the UK to New York, reaching volumes that have triggered delays in delivery. Delays reaching up to eight weeks if some reports are to be believed, compared to just a few days under normal circumstances.

The Dollar’s downfall continued last Friday after US retail sales posted their biggest loss since last February. The headline figure came in far below expectations with a 0.9% drop compared to the mere 0.1% fall priced in by forecasts. Sharp new year declines are nothing new, the festive season is over and the crushing misery of January typically lends to more frugal spending habits. The response from US indices was mixed; the response from the Dollar less so. The DXY made another leg down to close the week at 106.8 – a yearly low.

All quiet on the economic calendar today. This morning it was revealed that Japanese GDP growth considerably exceeded expectations but the Nikkei failed to react in the slightest. Absolutely nothing in the European session later on and US markets are closed due to Presidents’ Day.

The Reserve Bank of Australia is expected to lower rates on the Aussie Dollar on Tuesday, from 4.35% currently down to 4.1%. UK inflation data may provide some entertainment for currency traders on Wednesday, current forecasts are for a 2.8% yearly increase in prices. In the early hours of Thursday morning, the latest FOMC minutes are set to clarify the Fed’s decision-making process behind the most recent rate hold. Finally, the bulk of Friday’s news will be provided by the latest round of manufacturing PMIs.

February 17, 2025

Markets at the mercy of inflation data new

Happy Valentine’s Day. US inflation data tugged market sentiment one way then the other over the past couple of sessions. Wednesday’s CPI print caused some degree of panic after both the headline and core rates came in higher than expected, pushing the Dow and S&P 500 to minor losses. The data release made for a volatile day in currencies but ultimately the Dollar closed flat. Before markets had a chance to fully process the implications of higher inflation, the following day’s PPI numbers considerably softened the blow. Although still higher than expected, the figures suggest that the rate of appreciation has slowed down from December.

A small sign, but markets were all too happy to seize it. The first whiff of hope that the Fed may have grounds to cut interest rates in the not-too-distant future. Wishful thinking or not, the Dollar plummeted to the downside, dragging the DXY down 0.84% on the day. Gold took the other side of the equation, gaining an equal percentage to reach $2,928 an ounce. US stocks also took the news well, with all three major indices making decent gains, the S&P 500 in particular closing just shy of a record high.

There is still a long way to go before the next Fed meeting on the 19th of March, and a lot of fresh economic data along the way to orient their decision. Crypto markets are eagerly waiting a new era of lower rates, but for the time being are somewhat penned in. Bitcoin has still not convincingly broken and held above $100k and a lot of the major cryptos have displayed even weaker price profiles since the start of the year.

The bulk of the week’s drama is likely behind us at this point, but US retail sales could step in later today to provide one last bump in the road before markets settle down for the weekend. Buy flowers.

February 14, 2025

Gold closes lower after record-breaking surge new

Bulls managed to push gold all the way up to $2,942 an ounce yesterday before ceding ground ahead of Jerome Powell’s first round of comments on Capitol Hill. The Federal Reserve Chair faced the Senate Banking Committee on Tuesday, taking the opportunity to reiterate that there was no rush to lower interest rates on the Dollar. Powell stated that the US economy is strong overall with a solid labour market, but inflation remains above the Fed’s 2% target. Many investors would love to see some extra liquidity pumped into the system, but given the current strength of the US economy the Fed simply has no reason do so. Powell will no doubt repeat much of the same in front of the House Financial Services Committee later today. A reminder that the next interest rate decision is still five weeks away and markets are currently pricing in no change with a 96% probability.

The economic calendar has very little to offer until much later in the day, at which point US inflation data will shake things up a little. Attentions may also shift to oil markets this evening as we get the latest on crude inventories. Brent crude and WTI both saw decent buying pressure early in the week based on supply fears but the latest reports suggest US stockpiles have in fact risen. American Petroleum is now reporting an increase of over nine million barrels last week. Brent Crude now hovering in the mid-$76 range and WTI just under $73 a barrel.

February 12, 2025

USD in the spotlight ahead of Powell testimony

The latest round of NFP data provided traders with plenty to work with last Friday. Although the headline figure fell short of expectations, coming in at 143k new jobs versus 170k expected, the report provided grounds for optimism. Unemployment fell to 4% from 4.1% in December and figures for previous months were revised heavily to the upside, more than mitigating the most recent shortfall. As many economists were quick to point out, January is hardly the most aggressive month in terms of hiring.

Gold made a push towards new highs on Friday but the effort was thwarted in the end. By the looks of things, markets are eager to resume the battle this morning, carrying the price of gold up to $2,880 at the time of writing. Gold bugs will have enjoyed recent reports that the People’s Bank of China continued to expand its gold reserves for the third straight month in January.

The question of gold’s trajectory ultimately lies with the Dollar, which will face no small degree of scrutiny this week. Starting tomorrow, Fed Chair Jerome Powell will testify before Congress, where the main topic of conversation will undoubtedly revolve around interest rates. Attentions will not be limited to Powell either, with many Fed board members delivering speeches throughout the week. Wednesday will provide an update on the latest inflation metrics in the US, followed by retail sales on Friday. On top of all the above, tariffs are still very much on the table, as Trump prepares to enact reciprocal measures on a number of nations, including China.

February 10, 2025

China to levy tariffs on US oil and gas starting Monday

Markets stabilise ahead of Non-Farm Payrolls. The Dollar closed flat yesterday as traders patiently await the latest round of US employment data. The ADP employment figures published on Wednesday revealed an additional 183k new jobs, beating expectations of just 150k. The report sets the stage for the NFP release later today. Gold also receded from Wednesday’s all-time high, falling 0.4% yesterday to close at $2,856 an ounce.

Oil prices fell to their lowest of the year on Thursday, with Brent Crude sinking to $74 a barrel and WTI treading water above $70. A number of factors are weighing on crude prices, most recently China announcing that will begin levying tariffs on US oil and gas from next Monday. The measure can be viewed as a retaliatory response to the fresh tariffs imposed on Chinese goods imported into the US. Weak demand in the world’s second largest economy continues to be a worrying factor for oil prices, as do global demand forecasts in general. Unexpected increases in US stockpiles also contributed to poor price action this week.

In a widely anticipated move, the Bank of England elected to reduce interest rates on the Pound on Thursday, from 4.75% down to 4.5%. The decision was announced alongside the latest UK growth forecasts, which were surprisingly grim. The BoE now expects the UK economy to grow by just 0.75% in 2025, half what it was predicting three months ago. Cable fell the better part of a cent down to $1.243 by yesterday’s close.

Very little on the calendar today except for the aforementioned Non-Farm Payrolls. Current expectations are for 170k new jobs and a 4.1% unemployment rate. Time will tell.

February 07, 2025

Market watch: 5th February 2025

President Trump’s hallmark negotiating tactic lives on. Talk of aggressive trade tariffs over the weekend caused mayhem in financial markets early on Monday but softer tones over the last couple of days have already reversed much of the damage. Although the standoff with Mexico and Canada is looking at some kind of resolution, the situation with China remains uncertain.

Gold has been the standout performer amid all the uncertainty, returning to its traditional role as a safe-haven asset for investors seeking refuge. The precious metal has gone from record high to record high in recent sessions and yesterday was no exception, reaching $2,841 an ounce by the end of the day. Inflows have even extended to silver, which closed above $32 for the first time since last November. Bitcoin has partially recovered from the rout in cryptocurrencies earlier in the week but remains below $100k at the time of writing.

The Dollar withdrew from recent highs after wreaking havoc on Monday. The fallout from trade tariff posturing has left some interesting candles on major currency pairs but much of the violent price action appears to be behind us for the time being. The DXY retreated down to 108 late on Tuesday evening.

Difficult to say what lies in store for traders over the next few days but attentions may have to turn back to fundamentals at some point. Later today, markets will whet their appetites with ADP employment figures, which serve as a precursor to the more headline-grabbing NFP numbers on Friday.

February 05, 2025
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