News en

Gold has outperformed both stocks and bonds since the turn of the century. Gold was among the best-performing assets of 2023. According to analysis by the World Gold Council, gold outperformed emerging market stocks, U.S. bonds, the U.S. dollar, global treasuries, and commodities in general. The only asset classes that performed better than gold were U.S. stocks and developed-market foreign stocks.  But if we go back deeper in time to 1999, gold has narrowly outperformed stocks on an annualized basis as well. Dow Jones Commodity Index Gold (DJCI) tracks the gold market using the futures index. Dating back to the turn of the century, the DJCI has produced a 7.8 percent annualized return, according to S&P Dow Jones Indices head of commodities Brian Luke. That compares to a 7 percent return for the S&P500 over the same period. Bonds are even further behind in the race. The iBoxx USD Overall Index, measuring the performance of government and corporate bonds, has charted an average return of 4.1 percent since 1999. Adjusting for volatility, gold has also demonstrated better risk-adjusted returns than stocks in the 21st century, with a Sharpe ratio of 0.48 versus 0.45 for equities. The DJCI reached an all-time… Read More »Gold has outperformed the S&P 500 in the 21st century

Gold price consolidates around $2,030, as traders await US inflation data for fresh direction.  The US Dollar pauses Tuesday’s turnaround amid sluggish US Treasury bond yields and risk-aversion. Gold price ranges between 21-day SMA and 50-day SMA as bearish RSI counters Bull Cross.   Gold price is replicating the recovery move seen in Tuesday’s Asian trading early Wednesday, as broad risk-aversion underpins the traditional safe-haven. Geopolitical risks keep Gold price afloat  Simmering geopolitical tensions in the Middle East and increased cautiousness ahead of Thursday’s US inflation report keep investors away from riskier assets, scurrying for safety in the Gold price, as the US Dollar struggles to capitalize on the downbeat mood. The US Treasury bond yields also stay directionless, with the benchmark 10-year bond yields at around the 4.0% level. Iran-backed Houthi militants launched the largest attack to date on commercial merchant vessels, CNBC News reported on Tuesday, citing a senior US Defense Department official. Further, investors call for prudence, as markets keenly await the critical US Consumer Price Index (CPI) data on Thursday to gauge the pace and timings of the US Federal Reserve (Fed) interest rate cuts later this year. The current market positioning suggests a 62% chance… Read More »Gold Price Forecast: XAU/USD set to extend range play between two key averages

AUD/USD lost the 0.6700 mark on Tuesday. A deeper pullback could see the 200-day SMA revisited. Investors’ focus shifts to key inflation data on Wednesday. The decent rebound in the greenback put the broader risk-associated universe under extra downside pressure on turnaround Tuesday, exposing the Aussie dollar to extra weakness. Against that backdrop, AUD/USD broke below the key 0.6700 contention zone and seems to have paved the way for another potential test of the support region near 0.6650, or yearly lows. In the meantime, cautious trade is expected to emerge around AUD ahead of the publication of key inflation readings gauged by the Monthly CPI Indicator by the RBA. So far, consensus points to another soft print from domestic inflation, which should in turn support the idea of a pause by the RBA in a context where the central bank has not ruled out extra interest rate hikes. Sport also derived further selling pressure from another poor session in the commodity galaxy, where copper prices and iron ore extended their negative activity, while the absence of inspiring news from China is expected to keep the Australian currency under scrutiny. A quick look at the domestic calendar saw flash Building Permits… Read More »AUD/USD Forecast: All the attention remains on inflation prints

MARKETS With fingers tapping nervously amid the calm before the profit storm and uncertainties centred around the upcoming US CPI data, U.S. stock markets showed a mixed performance overnight, with the S&P 500 and Dow Jones Industrial Average experiencing losses as the Nasdaq Composite recorded marginal gains. At the same time, broader markets remain tied to the hip of the 10-year Treasury yield amid growing concerns the bullish narrative may flip, questioning whether bets on Federal Reserve rate cuts are overdone. We should have a more conclusive read on that after Thursday’s US CPI data. After a recent stock market dip, attention gradually shifts to the upcoming earnings season to gain insights into companies’ growth trajectories. Mega-cap technology firms, part of the Magnificent 7 group, are under close scrutiny due to their significant influence and substantial weight in the S&P 500. Their earnings outcomes will be crucial in determining the stock market’s overall direction. Investors are keen to discern whether recent declines are justified or whether companies’ profits remain robust enough to revive the end-of-year rally. The impact of the Federal Reserve’s rate hike policy, cautious consumer behaviour, macro uncertainty, and signs of economic contraction in Q4 have raised concerns… Read More »Fingers tapping nervously

XAU/USD Current price: 2,030.25 Investors hope easing inflation readings could help the Fed decide a rate cut. US Treasury yields tick north ahead of the US Consumer Price Index release. XAU/USD gains bearish traction amid renewed US Dollar demand, remains neutral. Spot gold keeps trading within familiar levels, with XAU/USD staying at the lower end of Monday’s range. The US Dollar gathered momentum after Wall Street’s opening as stocks edged sharply lower, reflecting a dismal market mood, although gains are restricted ahead of key macroeconomic figures. Market players hope the United States Federal Reserve (Fed) will soon start trimming interest rates, but await for the Consumer Price Index (CPI) figures to be out next Thursday to further support such a view. Over the past week, American employment-related data indicated the labor sector remains relatively tight, which may end up pushing inflation higher, undermining the Fed’s tightening policy. At the same time, the pair has pushed rates to multi-year highs, which risks a major economic setback. The central bank is at a point where hiking rates seems a major risk for economic progress compared to the benefits it may bring in taming price pressures. That’s why inflation-related data is so relevant… Read More »Gold Price Forecast: XAU/USD under pressure around $2,030

EUR/USD Current price: 1.0933 The focus remains on the United States Consumer Price Index. Mixed European data undermines demand for the Euro. EUR/USD is bearish in the near term, support at 1.0920. The EUR/USD pair trades with a soft tone on Tuesday, hovering around 1.0930. The pair trades within a well-limited range since the week started as market participants await fresh inflation data from the United States (US). The country will publish the December Consumer Price Index (CPI) next Thursday, foreseen at 3.2% YoY. Investors believe there is roughly a 60% chance the Federal Reserve (Fed) will proceed with a rate cut as soon as next March, despite the Fed repeatedly stating upcoming decisions will be data-dependant. Meanwhile, the US Dollar benefits from firmer US Treasury yields. The 10-year note offers 4.04%, up 4 basis points (bps) ahead of the opening and not far from last week’s peak of 4.10%. At the time being, the 2-year note yields 4.38%. Stock markets, on the other hand, trade with a sour tone, with European indexes trading in the red and dragging US futures alongside. Data-wise, European figures were mixed. On the one hand, German Industrial Production fell by 0.7% MoM in November,… Read More »EUR/USD Forecast: Near-term sellers increase the pressure

EUR/USD continues to fluctuate near 1.0950 for the second straight day. The pair remains stuck between the 100- and 200-period SMAs on the 4-hour chart. The economic calendar will not offer any high-impact data releases. EUR/USD is having a difficult time finding direction for the second consecutive day on Tuesday and extending its consolidation near 1.0950.

The financial markets are currently pricing in sharp interest rate cuts over the course of the year. In reality, however, the last mile in reaching the inflation target will be challenging and will determine the future interest rate path. Increased volatility is therefore to be expected on the bond market. We consider US government bonds to be attractively valued. The general yield level makes bond investments interesting. In the case of corporate bonds, we favour bonds in the BBB rating segment. The global equity markets should also achieve gains in the 1st quarter. Economy Despite a slowdown in the 4th quarter, the US economy is still solid and thus largely unaffected by the sharp rise in interest rates and real wage losses since 2022. However, the support provided by accumulated savings could soon run out, although rising real wages should also favour the economy this year. We therefore expect only a slight slowdown in growth this year. Inflation should continue to fall over the course of the year. However, the extent of this will depend on the price momentum for services. We only expect GDP growth of +0.7% in the eurozone in 2024. Over the course of the first half… Read More »Global strategy 1Q 2024

Good Morning! Dollar Index can trade within 102-103 while Euro could rise towards 1.10 while above 1.0870-1.09. EURJPY and USDJPY have declined sharply and could be bearish towards 157 and 143 respectively. USDCNY could rise slowly towards 7.18/20 while above 7.10/12. Aussie could be trading within 0.6650-0.6750 for the next few sessions while Pound could rise towards 1.28 or higher in the near term. USDRUB could trade within 90-92 for the next few sessions while EURINR may hold within 90.50-91.50. USDINR needs to rise from 83 else could break lower to test 82.90 before the expected rise is seen. The US Treasury yields have dipped slightly. The yields can rise further from here to test their resistances. Thereafter the overall downtrend can resume. The US CPI data release on Thursday will be important to watch.The German yields remain stable. Near-term view is positive to see a rise from here before reversing lower again. The 10Yr and 5Yr GoI are coming down as expected. Bias is negative to see more fall going forward. Dow Jones has risen back sharply but needs to rise above 37800 to negate the danger of falling. DAX has risen further and may look to rise more… Read More »Morning briefing: Euro could rise towards 1.1000

Gold price rebounds from three-week lows as the focus shifts to US inflation data.  The US Dollar struggles with US Treasury bond yields amid mixed Fedspeak and a better mood. Gold price eyes a meaningful recovery above the 21-day SMA at $2,043 amid a Bull Cross.   Gold price is back in the green early Tuesday, building on the turnaround from three-week lows of $2,017 set on Monday. The US Dollar (USD) is holding its pullback amid a better market mood and a modest uptick in the US Treasury bond yields. Gold price benefits from softer US inflation expectations Risk sentiment remains in a firmer spot, as Asian equities track the Wall Street tech rally, endorsed by renewed hopes of aggressive interest rate cuts by the US Federal Reserve (Fed) later this year. The dovish Fed expectations were reinforced after the New York Fed’s latest Survey of Consumer Expectations showed Tuesday that US consumers’ projection of inflation over the short run fell to the lowest level in nearly three years in December. The US Dollar snapped its winning run and pulled back sharply from three-week highs against its major rival currencies, tracking the sell-off in the US Treasury bond yields… Read More »Gold Price Forecast: XAU/USD needs to clear $2,042 for a sustained recovery