Bullion continues down as Fed seems determined to hike rates before the year's end
This article was written by Marius Paun who is the Senior Dealer at Citypoint Trading. Marius previously worked as a dealer for London Capital Group and on the Oil Desk at ODL Securities (now FXCM).
After consolidating for a few weeks, gold prices resumed their southward trajectory last Friday amid expectations that the Federal Reserve will raise interest rates for the first time since 2006, sending investors into the US dollar and in turn curbing demand for the precious metals.
Good News from China Increase Risk Appetites
However, a resilient manufacturing sector in China triggered a return in risk appetite on Monday pushing some market participants to cover their short positions. They were possibly concerned that most of the news is already priced in, and it was time to book part of the profits as a relief rally might follow. The short squeeze continued the next day and was supported by signs that housing and manufacturing sectors in the US could be losing some momentum.
This, however, has proved to be a ‘dead cat bounce’, and there may be a good chance to establish fresh short positions as once again gold prices seem to be heading south in anticipation of a looming US interest rates hike. The precious metal is down around 10% for this year and is on course for the third straight annual decline.
Gold-Backed ETPs at Six-Year Lows
Holdings in gold-backed Exchange -traded products (ETPs) slumped below 1490 tons, a record low since February 2009 according to data gathered by Bloomberg. Fed-fund futures now show that there is now an over 70 percent chance that the central bank will increase rates at its December 15-16 meeting, which should strengthen the greenback and in turn weaken the dollar-denominated gold even further.
Fed Chair Janet Yellen who addressed the Economic Club of Washington yesterday and the Joint Economic Committee of Congress on Thursday, already expressed her view that the future policy path will be data dependent. Furthermore, Chicago Fed President Charles Evans said earlier this week that he predicts the US interest rates to remain below 1% by the end of 2016.
Strong Economic Data from US Supports Greenback's Appeal
The ADP employment report released on Wednesday, indicated that the US added a five-month record number of workers, suggesting a possible good figure for the non-farm payrolls report due on Friday. Janet Yellen also expressed worries that keeping rates close to zero for too long could then force the Fed to tighten too quickly and the shock might disrupt global markets. It seems that investors interpreted Janet Yellen’s speech as a sign of confidence in the US economy and rushed into the US dollar.
In reaction, gold tumbled sharply and reached the weakest level in more than five years at $1046.44 an ounce in overnight trading. Although a pullback was underway on Thursday, the widespread consensus is for gold price to remain under pressure further in 2016.
This article was written by Marius Paun who is the Senior Dealer at Citypoint Trading. Marius previously worked as a dealer for London Capital Group and on the Oil Desk at ODL Securities (now FXCM).
After consolidating for a few weeks, gold prices resumed their southward trajectory last Friday amid expectations that the Federal Reserve will raise interest rates for the first time since 2006, sending investors into the US dollar and in turn curbing demand for the precious metals.
Good News from China Increase Risk Appetites
However, a resilient manufacturing sector in China triggered a return in risk appetite on Monday pushing some market participants to cover their short positions. They were possibly concerned that most of the news is already priced in, and it was time to book part of the profits as a relief rally might follow. The short squeeze continued the next day and was supported by signs that housing and manufacturing sectors in the US could be losing some momentum.
This, however, has proved to be a ‘dead cat bounce’, and there may be a good chance to establish fresh short positions as once again gold prices seem to be heading south in anticipation of a looming US interest rates hike. The precious metal is down around 10% for this year and is on course for the third straight annual decline.
Gold-Backed ETPs at Six-Year Lows
Holdings in gold-backed Exchange -traded products (ETPs) slumped below 1490 tons, a record low since February 2009 according to data gathered by Bloomberg. Fed-fund futures now show that there is now an over 70 percent chance that the central bank will increase rates at its December 15-16 meeting, which should strengthen the greenback and in turn weaken the dollar-denominated gold even further.
Fed Chair Janet Yellen who addressed the Economic Club of Washington yesterday and the Joint Economic Committee of Congress on Thursday, already expressed her view that the future policy path will be data dependent. Furthermore, Chicago Fed President Charles Evans said earlier this week that he predicts the US interest rates to remain below 1% by the end of 2016.
Strong Economic Data from US Supports Greenback's Appeal
The ADP employment report released on Wednesday, indicated that the US added a five-month record number of workers, suggesting a possible good figure for the non-farm payrolls report due on Friday. Janet Yellen also expressed worries that keeping rates close to zero for too long could then force the Fed to tighten too quickly and the shock might disrupt global markets. It seems that investors interpreted Janet Yellen’s speech as a sign of confidence in the US economy and rushed into the US dollar.
In reaction, gold tumbled sharply and reached the weakest level in more than five years at $1046.44 an ounce in overnight trading. Although a pullback was underway on Thursday, the widespread consensus is for gold price to remain under pressure further in 2016.
EU Parliament Imposes €10,000 Cash Payment Limit in New Anti-money Laundering Legislation
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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