|Day's range||1,279.90 - 1,284.90|
Gold futures edged higher early Monday, aiming for a rebound from a drop that took the commodity to the lowest close of 2018, as U.S. government bond rates retreated and as trade tensions elevated global uncertainty, providing support for bullion prices. A key move was the European Central Bank’s policy decision on Thursday to eventually unwind its crisis-era, easy-money programs but hold its benchmark rates at lower levels for a longer period than the market had expected.
Is the trade war on? Following China’s response to the U.S tariffs on China exports to the U.S, it could get ugly, with Trump’s first tweet of the week likely to have a material bearing of risk sentiment through the week.
As far as the trade war between the U.S. and China is concerned, we’ve seen the move by the Trump administration and the retaliation by China. Both moves were already on the table so no surprises there. One factor that could really get gold bulls talking would be if China slaps a duty on U.S. oil. This move would take the trade war to a new level of seriousness.
An 88-year-old institution Bank for International Settlements (BIS) which is based in Switzerland and serves as a central bank of other central banks stated that cryptocurrencies consume too much energy, are unstable, and subject to manipulation.
Leading actors from Switzerland’s financial, technological, academic and legal sectors have formed a new associative body – the Capital Markets and Technology Association (CMTA) – to facilitate the use of blockchain in financial markets. “The blockchain technology has the potential to reduce the complexity of the capital markets system and lower the barrier of entry for start-ups. By defining a set of industry-supported, open standards, the CMTA aims to facilitate access to funding for businesses, ultimately contributing to value creation throughout the economy”, says Jacques Iffland, CMTA’s chair, and partner at Lenz & Staehelin.
It’s another jam packed week ahead, with trade wars, OPEC, the Bank of England’s monetary policy decision and a number of central bankers slated to talk through the week. Things could get ugly if the U.S responds…
Gold’s freefall wasn’t much of a surprise to investors who have watched the market fail to respond to potentially bullish news over the last month including trade war tensions, the political turmoil in Italy, the economic turmoil in Venezuela. Despite the bearish outlook, we do think that conditions could turn quickly to the upside if a steep break in equity prices encourages strong flight-to-safety buying.
Based on the close at $1278.50, the direction of the gold market on Monday is likely to be determined by trader reaction to the main bottom at $1286.80.
Gold markets broke down significantly during the trading session on Friday, as people start running towards US treasuries in the face of a potential trade war. It’s likely that we will continue to see a lot of volatility in this market, but what’s more telling is the fact that we have broken through a major uptrend line that extends back to December 2016.
The US dollar has rallied significantly on Friday against the Canadian dollar, as there has been a bit of a “risk off” move during the day as tariffs were slapped on the Chinese by the Americans, that of course has the commodity currencies falling overall.
The U.S. Commodity Futures Trading Commission has claimed it has jurisdiction over a cryptocurrency called My Big Coin and has asked a federal judge to grant it authority to proceed with the lawsuit which claims the cryptocurrency has been operating a $6 million fraud. CFTC claims My Big Coin Pay, based in Nevada, misappropriated $6
Based on the current price at 2774.50 and the early price action, the direction of the September E-mini S&P 500 Index is likely to be determined by trader reaction to the minor 50% level at 2775.75.
Due to the steep sell-off on Thursday and the subsequent follow-through selling on Friday, we’re going to watch yesterday’s close at 1.1565 for direction today.
We continue to expect a rangebound trade with the current supply deficit enough to provide support, but the weather still not hot enough to sustain a rally.
Gold prices initially rose after the ECB announced it would end stimulus in December then weakened once it became clear the central bank had no intention of raising rates until at least July 2019.
Ethereum markets rallied initially during the trading session on Thursday but gave back the gains as we continue to see weakness and a general “sell the rallies” type of situation.
The S&P 500 of course was very noisy during the trading session as we had the ECB rate decision and of course the press conference from that same central bank. It appears that the US stock markets as well as many other ones around the world like what they hear.
Gold markets rallied during the trading session on Thursday, as we broke towards the $1308 level above. The market continues to be very resisted at that area, but I do think that eventually we can break above there. Part of this reaction was due to the ECB stepping away from quantitative easing only partially, and not completely as I think some traders anticipated.
A cryptocurrency mining startup is reportedly making a foray into becoming the first industry firm to be listed on the London Stock Exchange. Argo Blockchain, a mining-as-a-service provider, just announced it intends to sell shares of its common stock to raise £20 million from an initial public offering (IPO), according to the London Stock Exchange.
Draghi said, “We didn’t discuss when to raise rates.” That quote was a red flag for long Euro investors, catching many off-guard and obviously on the wrong side of the market. It also highlighted the divergence in monetary policies between the hawkish U.S. Federal Reserve and the dovish European Central Bank.
The EUR/USD may be moving lower because the extension of QE and the increased amount of stimulus is essentially bearish for the Euro. However, it is a necessary step in the process to avoid shocking the Euro Zone economy by exiting from stimulus too quickly.
Based on the current price at $66.85, the direction of the crude oil market the rest of the session is likely to be determined by trader reaction to the Fib level at $66.85 and the 50% level at $66.34.