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Positive stability for gold futures contracts for the first time in
The price of gold settled at the level of 1760 at the beginning of
the Asian session, recording its positive stability for the third consecutive session,
after the German company Merck announced a new drug for Corona.
It is noteworthy that Federal Reserve Governor Jerome Powell and US Treasury Secretary Janet Yellen
testified last week before the House Financial Services Committee regarding the quarterly report of
the Corona Virus and “CARES” law, which included Powell expressed that the Federal Reserve still
expects the pace of inflationary pressures to subside with The statement that the situation is very
difficult because the Federal Reserve finds itself on the tension between inflation and employment.
Powell emphasized at the time that resolving the tension between high inflation and high unemployment
was the most urgent issue for the Federal Reserve, which market analysts considered as an acknowledgment
of a potential conflict between the Federal Open Market Committee's two goals of price stability and full
employment, and Powell noted in his testimony that we are still far away. Extremely about full employment
and inflation well above the target.
The euro continues to rebound from its lowest in 15 months
The single currency, the euro, traded in a narrow range tilted to
the upside during the Asian session, to record its rebound for the
third session from its lowest since July 23, 2020 against the US dollar,
awaiting the economic data expected today, Monday, by the economies of the euro area,
and the US economy, looking forward to Activity of the Eurogroup meetings in Brussels.
The markets are looking forward to Spain, the fourth largest economy in the Eurozone, the release
of the unemployment change index for the month of September,
In conjunction with the activities of the Eurogroup meetings, which are attended by the finance
ministers of member states, the Commissioner for Economic and Monetary Affairs and the Governor of
the European Central Bank.
On the other hand, investors are currently awaiting the release of the factory orders reading by the US economy
and the markets are also waiting for the speech of Deputy Federal Reserve Governor and Federal Committee member
Randall Quarles about the transformation of (Libor) the fixed rate for interbank lending at the Conference
of the Structuring Finance Association in Las Vegas.
Oil makes profits despite the dollar's decline
The Energy Information Administration has announced a decline
in crude stocks in America by 3.5 million barrels to 414 million barrels
last week, while analysts expected a decline of 3.8 million barrels
This comes despite the continuing crisis of the Chinese real estate company, Evergrande,
and the concern about its impact on the second largest economy in the world.
The Chinese central bank is trying to allay market fears by injecting $18.6 billion into
the banking system in response to the Evergrande crisis.
A very small rise for gold
The markets responded to the Federal Reserve’s decisions last
Wednesday to fix the interest rate at the range between zero
and 0.25%, but it hinted at raising it three times in 2023 and three
more times in 2024 to reach 1.8%.
And Fed Chairman Jerome Powell said in a press conference that he expected to start reducing
bond purchases related to the Corona pandemic in November.
The dollar index (against a basket of major currencies) at 4:38 GMT decreased by 0.4% to 93.1 points,
and recorded the highest level at 93.1 points and the lowest level at 93.03 points.
In terms of trading, spot gold prices rose at 4:39 GMT by 0.1% to $1,751 an ounce, and the highest price
was at $1752.7 and the lowest price was at $1743.2.
Dollar falls as Evergrande fears fade, Fed tensions escalate
Some calm returned to the markets early Tuesday after Monday's
massive Evergrande sell-off. The dollar is one of the highest across
Uncertainty reigns over Chinese policy and is joined by tensions ahead
of the Federal Reserve's decision on Wednesday.
Canadian Prime Minister Trudeau was re-elected and cryptocurrencies are still depressed.
China's second-largest real estate firm remains cash-strapped, but a growing group of banks
such as Barclays, UBS and Citi say this is not a "Lehman moment" for the world's second-largest
economy. While Evergrande is likely to miss out on other debts and even go down, markets appear
less fearful of contagion to the broader Chinese economy and the global economy.
Gold under the influence of Evergrande risk
- Slight improvement in risk sentiment amid stable Hong Kong stocks and
conciliatory comments from China Evergrande Chief capped gold recovery
The Fed's tapering plan looks sound, despite recent China concerns. The risk rebound
could rise at a high pace, extending the bounce in Treasury yields while raising demand
for the US currency once again. In such a case, gold is likely to resume its downtrend.”
Opening grounds for a new low towards multi-week lows near $1,740. The psychological barrier
of $1,700 will be on sellers' radars if monthly lows decline.
With the focus shifted to the FOMC, gold looks weak
The path of least resistance for gold to the downside:
- The US Federal Reserve is likely to announce its lowering plans,
starting at the end of this year, at its September 21-22 monetary policy meeting.
- The Bank of England is also hinting at diminishing, given the rising inflation in the UK.
A possible withdrawal from the monetary policy stimulus will continue to bode ill for gold.”
Failing to defend the monthly lows at $1,742, a new downside move towards $1,700 could start
Causes of price slippage for major currency pairs
-The US dollar continues to attract support from expectations
regarding the impending gradual announcement of the Federal
The US dollar got additional support from the risk aversion in
Signs of easing inflationary pressures in the United States.
- Recent data indicated the continuation of the US economic recovery.
Optimism that the US Federal Reserve will start to undo massive pandemic-era
stimulus sooner rather than later.
- The recent rise in US Treasury yields, which in turn acted as a tailwind for the US dollar and
put pressure on the major currencies.
Silver futures contract fell more than 1% below $26 an ounce
Silver futures contracts fell by more than one percent during the Asian session,
to witness its rebound for the third consecutive session, when it reversed
the worst daily performance since February 2, amid the positive stability
of the US dollar index near its top, according to the inverse relationship between them.
Investors are currently awaiting the release of the unemployment claims index
the past week by the US economy, and awaiting the Federal Reserve's disclosure
of the consumer credit index.
Variation in the performance of oil futures contracts
Oil futures fluctuated in a narrow range, explaining a divergence in performance
during the Asian session, the rebound of the Nymex crude contracts for the third
consecutive session from their highest since November 24, 2014, and positive stability
for Brent crude contracts near the lowest in two weeks, overlooking the The positive
stability of the US dollar index near its highest in three months, according to the inverse
relationship between them.
Investors are awaiting economic data expected today, Thursday, on the US economy,
the largest consumer and producer of oil in the world, which includes the disclosure of the Energy
Information Administration's report for the past week.
Falling gold futures contracts
Gold futures fluctuated in a narrow range tilted to the downside to settle below
the $1,800 per ounce barrier during the Asian session, amid the positive stability
of the US dollar index, according to the inverse relationship between them.
Investors are currently awaiting the US economy's release of the unemployment claims
index for the past week.
11th November 2018
11th November 2018
11th November 2018