Traders should keep a close eye on US retail sales and the Consumer Price Index (CPI) reports from New Zealand, Canada, and the UK this week, as these updates could have a substantial influence on the market. Exercise caution and stay up to date with the latest developments to ensure a successful week of trading.
Here are some notable market highlights for the upcoming week:
New Zealand Consumer Price Index (17 October 2023)
In Q2 2023, the CPI for New Zealand increased by 1.1%.
The CPI data for Q3 is set to be released on 17 October, with analysts anticipating a 1.9% increase.
UK Claimant Count Change (17 October 2023)
The number of people claiming unemployment benefits in the UK increased by 900 in August 2023.
An additional increase of 22,000 is anticipated in the upcoming data, due for release on 17 October.
Canada Consumer Price Index (17 October 2023)
Canada’s CPI rose by 0.4% in August 2023 compared to the previous month.
Analysts expect a 0.1% increase in the September figures, which are scheduled for release on 17 October.
US Retail Sales (17 October 2023)
US retail sales saw a month-over-month increase of 0.6% in August 2023, surpassing the 0.5% uptick recorded in July 2023.
Analysts anticipate a 0.3% increase in the data for September, set to be released on 17 October.
UK Consumer Price Index (18 October 2023)
CPI in the UK eased to 6.7% in August 2023 from 6.8% in the previous month, the lowest rate since February 2022.
CPI figures for the next reporting period are expected to further decrease to 6.5%.
Employment in Australia (19 October 2023)
Employment in Australia increased by 64,900 in August 2023, while the unemployment rate stood at 3.7%.
Analysts anticipate that the employment figures for September 2023 will reflect an increase of 20,900 jobs, with the unemployment rate expected to remain at 3.7%. This data is scheduled for release on 19 October.
UK Retail Sales (20 October 2023)
Retail sales in the UK rose by 0.4% in August 2023, partially recovering from a 1.1% decline in July.
The next set of data will be released on 20 October, with analysts expecting a decrease of 0.3%.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
On Thursday, the stock market faced a decline driven by concerns over rising Treasury yields and persistent US inflation, marking the end of a four-day winning streak for major indexes. The Dow Jones Industrial Average dropped 0.51%, while the S&P 500 and Nasdaq Composite fell by 0.62% and 0.63%, respectively. Meanwhile, the US Dollar rallied by 0.80% as robust economic data and increased Treasury yields reinforced expectations of prolonged high interest rates. European currencies, such as the Euro and British Pound, experienced declines, while precious metals like Gold and Silver slipped due to rising Treasury yields. Geopolitical concerns, including the Israel-Hamas conflict, also contributed to market sentiment.
Stock Market Updates
Stocks experienced a decline on Thursday due to concerns about rising Treasury yields and persistent U.S. inflation. The Dow Jones Industrial Average closed 0.51% lower, dropping 173.73 points to 33,631.14, while the S&P 500 fell by 0.62%, finishing at 4,349.61, and the Nasdaq Composite lost 0.63%, closing at 13,574.22. This decline marked the end of a four-day winning streak for the major indexes. Treasury yields surged with the 10-year rate increasing by nearly 11 basis points to 4.70%, while the 2-year Treasury yield reached 5.06% after rising more than 6 basis points. Many investors believe that higher yields are becoming a permanent feature, which influenced the equity market’s downturn. The consumer price index released on Thursday revealed a 0.4% increase on the month and a 3.7% increase from a year ago, exceeding Dow Jones estimates of 0.3% and 3.6%, respectively.
In corporate news, Walgreens saw its shares trade 7% higher after reporting narrower losses and progress in cost-cutting plans, although it offered soft profit guidance and missed earnings expectations. Additionally, several major companies, including JPMorgan, BlackRock, and UnitedHealth Group, are scheduled to report earnings on Friday. Geopolitical concerns also played a role in market sentiment, as the ongoing Israel-Hamas conflict raised questions about a potential oil supply crunch and a subsequent increase in fuel prices should the instability spread to neighboring oil-producing regions.
On Thursday, across all sectors, the overall market saw a decline of 0.62%. The Information Technology sector performed the best with a modest gain of 0.10%, while Energy followed closely with an increase of 0.09%. On the other hand, the Utilities sector experienced the most significant drop, with a decline of 1.50%. Additionally, Real Estate, Consumer Staples, and Materials sectors also saw notable decreases, declining by 1.31%, 1.15%, and 1.52%, respectively. The Financials, Health Care, Industrials, Consumer Discretionary, and Communication Services sectors all recorded losses ranging from 0.63% to 1.11%.
Currency Market Updates
The US Dollar exhibited a significant rally, recovering from previous losses but still below recent cycle peaks. The US Dollar index surged by 0.80% to reach 106.55, primarily propelled by robust US economic data and increased Treasury yields. In September, the US annual Consumer Price Index (CPI) exceeded expectations, registering at 3.7%, surpassing the market consensus of 3.6%. The Producer Price Index (PPI) also outperformed expectations, and Initial Jobless Claims remained slightly below the consensus, at 209,000. This series of strong US economic data and the persistence of inflation above target levels reinforced expectations of prolonged high interest rates. Analysts noted that the Federal Reserve is likely to remain patient as it assesses the overall data, with the focus on the upcoming November FOMC meeting. Meanwhile, US Treasury yields experienced an increase, with the 10-year yield rising from 4.57% to 4.73%, and the 2-year yield from 4.98% to 5.07%.
In the currency markets, the Euro (EUR/USD) saw a significant decline to 1.0525 from around 1.0630 due to the strengthening US Dollar, driven by the robust economic data. Europe is awaiting the release of Industrial Production data for August and an appearance by European Central Bank (ECB) President Lagarde at the annual International Monetary Fund and World Bank meeting. The British Pound (GBP/USD) ended its six-day positive streak, recording a 140-pip drop below 1.2200 amid negative risk sentiment. The New Zealand Dollar (NZD/USD) declined for the second consecutive day, falling below 0.6000 and the 20-day Simple Moving Average (SMA) to reach 0.5925. New Zealand is poised to release Electronic Card Retail Sales data and the Business NZ PMI for September. The Australian Dollar (AUD/USD) posted one of its lowest daily closes for the year, hovering slightly above 0.6300, with a downward bias and attention on the October lows at 0.6285. Meanwhile, the Canadian Dollar (USD/CAD) strengthened, approaching 1.3700 on the back of US Dollar strength, with a potential target of 1.3800 if it closes above 1.3750. Precious metals like Gold and Silver faced declines due to the rise in Treasury yields, with Gold slipping below $1,870 and Silver dropping beneath $22.00. Upcoming data releases from China and Europe, as well as the University of Michigan Consumer Sentiment survey, hold the potential to impact these currency markets, especially those of the antipodean currencies.
Picks of the Day Analysis
EUR/USD (4 Hours)
EUR/USD Slides to 1.0520 as Stronger US Dollar, Rising Yields Pressure Pair
The EUR/USD pair dipped from weekly highs above 1.0630 to 1.0520, driven by a stronger US Dollar bolstered by higher Treasury yields and encouraging US economic data. The European Central Bank’s recent meeting minutes revealed support for a potential interest rate hike, though this had a limited impact on the Euro. Meanwhile, the US Dollar gained further momentum following a 0.4% rise in the Consumer Price Index (CPI) for September, adding to expectations of prolonged higher interest rates. With the 10-year yield surging to 4.72%, the Greenback’s correction ended, leaving it poised to challenge cycle highs.
Based on technical analysis, the EUR/USD fell on Thursday, pushing towards the lower band of the Bollinger Bands. Currently, the EUR/USD is trading around the lower band, while the bands are trending upwards, suggesting the potential for consolidating move to retest the middle Bollinger Band. The Relative Strength Index (RSI) stands at 42, indicating that the EUR/USD is back to netural bias.
Resistance: 1.0582, 1.0640
Support: 1.0520, 1.0460
XAU/USD (4 Hours)
XAU/USD Dip as Hawkish Fed Sentiment Surges on Strong US CPI Data
Investors are reevaluating their expectations for the US Federal Reserve as robust Consumer Price Index (CPI) data, revealing a 0.4% increase last month and an annual inflation rate of 3.7% in September, further strengthens the narrative of “higher rates for longer.” This has boosted the US Dollar and Treasury bond yields, causing Gold prices to retreat from their recent two-week high above $1,880 and dip below $1,870. The surge in hawkish Fed sentiments is fueling uncertainty, with markets now placing a 38% probability of a December rate hike, compared to the previous 28%. In addition, softer Chinese CPI and Producer Price Index data are contributing to risk aversion. As we await US Consumer Sentiment and Inflation Expectations data, along with speeches from Fed policymakers, the future of the US Dollar remains uncertain.
Based on technical analysis, XAU/USD is moving slightly lower on Thursday and able to reach the middle band of the Bollinger Bands. Currently, the price of gold is trading slightly above the middle band with the potential of moving back higher. The Relative Strength Index (RSI) currently registers at 62, indicating a bullish bias for the XAU/USD pair.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
Major stock indices, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, saw modest gains as investors awaited U.S. consumer inflation figures and monitored Treasury yields’ retreat. The market was also influenced by expectations of the consumer price index report and Federal Reserve policy, while Exxon Mobil announced a significant acquisition and Birkenstock faced a challenging market debut. Geopolitical tensions in Israel and Hamas contributed to market uncertainty. In the currency market, the US Dollar remained flat despite positive wholesale inflation data and FOMC minutes, with the focus shifting to the impending Consumer Price Index release and divergent views among committee members. The US Dollar Index and Treasury yields experienced minor fluctuations, while currency pairs like EUR/USD and GBP/USD demonstrated varied behavior. Gold and Silver rallied due to lower yields and a weakened US Dollar.
Stock Market Updates
In Wednesday’s stock market, major indices saw modest gains as investors eagerly awaited the release of the new U.S. consumer inflation figures, while Treasury yields continued their retreat. The Dow Jones Industrial Average rose by 0.19%, or 65.57 points, closing at 33,804.87. The S&P 500 experienced a 0.43% increase, ending the day at 4,376.95, while the Nasdaq Composite, dominated by tech stocks, surged 0.71% and closed above its 50-day moving average for the first time since September 14. This marked the fourth consecutive day of gains for these key indices. Investors were also anticipating the consumer price index report for September, with economists predicting a 0.3% increase from the previous month and a year-over-year rise of 3.6%. This data was seen as critical for insights into future Federal Reserve policy moves, especially after the recent revelation of hotter-than-expected wholesale inflation figures. Additionally, the release of minutes from the Fed’s September meeting indicated that a majority of officials believed one more interest rate hike was likely, with rising Treasury yields playing a significant role in their considerations.
On the corporate front, Exxon Mobil announced the acquisition of shale driller Pioneer Natural Resources in an all-stock deal worth $59.5 billion, marking the largest merger announced on Wall Street in the year. Meanwhile, sandal manufacturer Birkenstock faced a challenging market debut, with shares priced at $46 each but falling to $40.20 by the close of the session. Investors were also monitoring the ongoing conflict between Israel and Hamas, as the latter launched an attack on Israeli civilians, leading to the deadliest offensive in the region in five decades. President Joe Biden condemned the attacks as terrorism and expressed unwavering support for Israel. Overall, the market sentiment appeared uncertain, with conflicting factors such as inflation, interest rates, and geopolitical tensions contributing to the mixed outlook for stocks.
On Wednesday, the performance of various sectors in the market showed mixed results. Overall, all sectors combined saw a modest increase of 0.43%. Among the sectors, Real Estate performed exceptionally well with a gain of 2.01%, followed by Utilities at 1.63%, and Communication Services at 1.07%. Information Technology and Industrials also had positive gains at 1.01% and 0.62%, respectively. Meanwhile, Consumer Discretionary and Materials had smaller gains at 0.48% and 0.23%. On the other hand, Financials and Health Care experienced minimal gains of 0.11% and a decline of -0.43%, respectively. Consumer Staples and Energy were the worst-performing sectors, with losses of -0.64% and -1.35%, respectively.
Currency Market Updates
In the recent currency market updates, the US Dollar remained largely flat despite unexpected positive data on US wholesale inflation and the release of the Federal Open Market Committee (FOMC) minutes. The Greenback’s weakness persisted as US Treasury yields continued to retreat, and a risk-on sentiment in the Wall Street stock market failed to provide support. Notably, the US Producer Price Index (PPI) accelerated in September, surprising analysts by rising from 2.0% to 2.2%, as compared to the expected 1.6%. However, this development did not raise significant concerns, with all eyes turning to the impending release of the Consumer Price Index (CPI), expected to decrease from 3.7% to 3.6% in September, promising heightened volatility in the currency market. Furthermore, the FOMC minutes revealed divergent perspectives among committee members, emphasizing a data-dependent approach and the necessity of a substantial rebound in inflation to reach a consensus on further interest rate hikes.
Following the FOMC minutes, the US Dollar Index (DXY) experienced a slight pullback but managed to finish flat at 105.75, rebounding from strong support at 105.50. The US Treasury yield for 10-year bonds dropped to 4.55%. Notably, EUR/USD maintained its recent gains and stayed close to a strong resistance level at 1.0630, demonstrating a bullish tone. However, with a week of continuous ascent, the pair appeared poised for a consolidation phase, pending the release of the US CPI figures. Meanwhile, GBP/USD achieved a second consecutive daily close above the 20-day Simple Moving Average, hovering around 1.2300 and indicating signs of potential fatigue in its recovery. Key economic data releases are expected in the UK on Thursday. In addition, Gold and Silver rallied, benefiting from lower yields and a weakened US Dollar, breaking above $1,860 and $22.00, respectively.
Picks of the Day Analysis
EUR/USD (4 Hours)
EUR/USD Rebounds from Monthly Lows Amidst Weakening US Dollar and Data-Dependent Fed Stance
The EUR/USD pair tested levels above 1.0630 before pulling back, displaying modest gains as it recovers from monthly lows. Trading in a critical area, the Euro awaits more US inflation data, benefiting from the US Dollar’s weakness due to declining yields and positive market sentiment. The unexpected rise in the US Producer Price Index didn’t significantly impact the Dollar, while the latest FOMC minutes highlighted the Fed’s data-dependent approach to policy. A busy economic calendar on Thursday includes the release of ECB minutes and the US Consumer Price Index, with potential market impact depending on the CPI’s performance.
Based on technical analysis, the EUR/USD rose on Wednesday, pushing towards the upper band of the Bollinger Bands. Currently, the EUR/USD is trading below the upper band, while the bands are trending upwards, suggesting the potential for another upward move to retest the upper Bollinger Band. The Relative Strength Index (RSI) stands at 62, indicating that the EUR/USD is currently attempting to establish a bullish bias.
Resistance: 1.0674, 1.0736
Support: 1.0583, 1.0530
XAU/USD (4 Hours)
XAU/USD Surges to Two-Week High Amidst US Dollar Weakness and Bond Yield Concerns
In a strong rally, the price of gold (XAU/USD) soared to a fresh two-week high at $1,877.19 per troy ounce on Wednesday. This impressive surge was attributed to the widespread weakness of the US Dollar, which was in turn linked to declining US Treasury bond yields. The dip in yields was partially driven by renewed demand for safety amid Middle East developments and dampened expectations of another Federal Reserve rate hike, as policymakers generally anticipate that robust yields will obviate the need for further tightening. Nevertheless, even as yields have eased lately, they remain near the multi-decade highs observed in September. Investor sentiment became cautious after the release of the US Producer Price Index (PPI) and in anticipation of the FOMC Meeting Minutes, as wholesale inflation in the country surged by 2.2% YoY in September, exceeding market expectations and August figures. The release of the Consumer Price Index (CPI) on Thursday is anticipated to show a 3.6% YoY increase, further influencing the gold market.
Based on technical analysis, XAU/USD is trending higher on Wednesday, creating an uptrend within the Bollinger Bands. Currently, the price of gold is trading slightly below the upper band and is beginning to consolidate between the middle and upper bands of the Bollinger Bands. The Relative Strength Index (RSI) currently registers at 75, indicating a bullish bias for the XAU/USD pair.
Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.
Please refer to the table below for more details:
The above data is for reference only, please refer to the MT4/MT5 software for specific data.
If you’d like more information, please don’t hesitate to contact [email protected].
On Tuesday, U.S. stocks surged with the Dow Jones Industrial Average gaining 0.40%, the S&P 500 rising 0.52%, and the Nasdaq Composite adding 0.58%. This upward trend was fueled by a significant drop in Treasury yields, down 13 basis points to 4.65%, as investors sought safer assets due to the Israel-Hamas conflict. Positive market sentiment and anticipation of economic data releases also contributed to the market’s positive performance. The U.S. Dollar faced another decline, influenced by Wall Street’s performance, as key economic data and Federal Reserve minutes awaited scrutiny. In the currency markets, the Euro, British Pound, Australian Dollar, and New Zealand Dollar all saw gains against the U.S. Dollar, while the Japanese Yen experienced a setback.
Stock Market Updates
On Tuesday, U.S. stocks experienced a notable rise, with the Dow Jones Industrial Average surging by 0.40%, or 134.65 points, to close at 33,739.30, while the S&P 500 gained 0.52%, ending at 4,358.24. The Nasdaq Composite, which has a tech-heavy focus, added 0.58%, reaching 13,562.84. This increase in stock prices was partly attributed to a significant decrease in Treasury yields, with the benchmark 10-year Treasury yield falling by nearly 13 basis points to approximately 4.65%. This decline in yields occurred as investors sought safer assets amid the ongoing Israel-Hamas conflict. The bond market had been closed on Monday due to Columbus Day, and this shift in bond yields was the initial market reaction to the geopolitical situation. Additionally, falling oil prices after a previous rally provided further relief to investors. Despite initial concerns over rising interest rates and the conflict’s geopolitical risks, optimism grew in light of a strong September payrolls report and anticipation of upcoming third-quarter earnings releases.
One key contributor to the market’s positive performance was the shift in bond yields. This shift was perceived as a potential indication that the recent rapid increase in yields might be slowing down. Investors also began looking beyond the geopolitical concerns posed by the Israel-Hamas war and focused on economic factors, with anticipation building for inflation data releases scheduled for later in the week. Small-cap stocks, such as those in the Russell 2000 and the S&P Small Cap 600 index, demonstrated strong performance, gaining just over 1% each during the trading session. This marked the Russell’s fifth consecutive day of gains, a feat not seen since July. However, some investors remained cautious, viewing the rally as a reaction to previously priced-in negative sentiment and oversold conditions. Despite the market’s positive day, concerns about the ongoing inflationary pressures persisted, with some experts suggesting that the fourth quarter may be relatively flat despite expectations of positive earnings growth for the third quarter. Notable stock movements included PepsiCo’s 1.9% rise following better-than-expected third-quarter results and an upward revision of its earnings outlook, as well as positive gains for energy and industrial companies like Enphase Energy (5% increase) and Generac Holdings (3.8% gain).
On Tuesday, the stock market experienced overall gains, with all sectors combined rising by 0.52%. The biggest increases were seen in Utilities (+1.36%), Consumer Discretionary (+1.09%), Materials (+1.08%), and Consumer Staples (+1.08%). Other sectors also saw positive movements, but to a lesser extent, with Financials gaining 0.77%, Industrials increasing by 0.57%, Health Care by 0.49%, Real Estate by 0.30%, Communication Services by 0.22%, and Information Technology by 0.15%. Energy was the only sector that showed a decrease, with a decline of -0.02%.
Currency Market Updates
The US Dollar faced another decline as positive market sentiment persisted and US yields remained distant from recent peaks, with the 10-year yield settling at 4.65% and the 2-year yield falling below 5%. This depreciation pushed the DXY index to its lowest daily close since September 18, dipping below 106.00. In the coming days, market watchers are eagerly awaiting key economic data and releases from the Federal Reserve. The US will unveil the September Producer Price Index (PPI), which could carry significant consequences if it surprises to the upside. Furthermore, the Federal Reserve will publish the minutes from the September FOMC meeting, offering insights into the central bank’s economic outlook. Meanwhile, the US Dollar’s decline was influenced by Wall Street’s positive performance, and despite a modest pullback in crude oil prices, commodity markets demonstrated mixed movements.
In the currency markets, the Euro made gains against the US Dollar, surpassing the 20-day Simple Moving Average for the first time since August, reaching a level around 1.0600. Key resistance for the EUR/USD pair is anticipated at 1.0630. The British Pound also benefited from short-term momentum, with GBP/USD rising above the 20-day SMA and hovering near 1.2300. The Japanese Yen experienced a setback, as rising equity prices and a modest rebound in yields pushed USD/JPY above 149.00, though it later retraced to 148.60. In contrast, the Australian Dollar saw gains for the fifth consecutive day, with AUD/USD maintaining a position above 0.6400 and aiming to extend its recovery, with significant resistance awaiting at 0.6500. The New Zealand Dollar followed a similar trajectory, holding above 0.6000 and posting its highest daily close in two months at 0.6040. Finally, USD/CAD remained relatively stable around the 1.3600 range as the Canadian Dollar consolidated recent gains, with a flat 20-day SMA at 1.3555 offering a potential point of interest.
Picks of the Day Analysis
EUR/USD (4 Hours)
EUR/USD Reaches Two-Week High at 1.0620 Amid US Dollar Correction and Geopolitical Concerns
In recent trading, the EUR/USD pair experienced a surge to 1.0620, marking its highest level in two weeks, before slightly retracing to the 1.0600 range. This upward movement is fueled by an improved market sentiment and the ongoing correction of the US Dollar, compounded by concerns over geopolitical events. The spotlight now turns to the upcoming US inflation data, particularly the Producer Price Index (PPI) and Consumer Price Index (CPI), as well as the release of the FOMC minutes, which will shed light on the Federal Reserve’s monetary policy expectations. Meanwhile, in Europe, the German Consumer Price Index remains stable, but the sluggish inflation and a pessimistic economic outlook suggest that the European Central Bank is likely done with interest rate hikes.
Based on technical analysis, the EUR/USD went up on Tuesday and managed to reach the upper band of the Bollinger Bands. Right now, the EUR/USD is trading below the upper band, which suggests a chance for a small downward move to reach the middle band of the Bollinger Bands. The Relative Strength Index (RSI) is at 59, indicating that the EUR/USD is currently trying to return to a neutral position with a bullish bias.
Resistance: 1.0616, 1.0674
Support: 1.0530, 1.0460
XAU/USD (4 Hours)
XAU/USD Shines as Investors Seek Safety Amid Fed’s Monetary Tightening Hints and Easing Dollar
Spot Gold has extended its weekly rally to $1,865.35 a troy ounce as investors continue to seek safety, while the US Dollar eases following comments from different Federal Reserve (Fed) officials, hinting at no more monetary tightening. Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan noted that higher Treasury yields help tighten financial conditions and could offset the need for additional hikes, while Atlanta Federal Reserve President Raphael Bostic believes the policy rate is sufficiently restrictive to reach the 2% inflation target, despite acknowledging there’s still a long way to go. Meanwhile, tensions in the Middle East have fueled demand for government bonds, resulting in easing yields, making Gold an attractive option for investors.
Based on technical analysis, XAU/USD is consolidating on Tuesday creating a narrow range in the price movement. Currently, the price of gold is moving between the middle and upper bands of the Bollinger Bands. The Relative Strength Index (RSI) currently stands at 65, signaling a bullish bias for the XAU/USD pair.
Gold, often referred to as the “King of Metals,” has consistently held a paramount position in the world’s economic landscape, transcending mere aesthetics and luxury.
Gold source ThoughtCo
A prime example underscoring gold’s critical role in the global economy lies in the significant gold reserves central banks maintain. These financial linchpins of nations uphold these reserves as a testament to gold’s unparalleled value, a tradition spanning centuries.
During the height of the late 19th and early 20th-century gold standard era, major economies like the United States anchored their currencies to gold, solidifying the stability of the global financial system.
For instance, the U.S., a major economic power at the time, boasted one of the largest gold reserves, officially holding approximately 20,663 metric tons of gold as of 1939, just before the outbreak of World War II. A considerable portion of this gold was securely housed at Fort Knox in Kentucky, a renowned depository.
Gold, beyond its charm, stands as a financial cornerstone, bolstering stability, credibility, and global relations. Appreciating its cultural, economic, and historical worth requires understanding its extensive history. Gold’s journey across civilisations reveals its enduring allure and lasting impact on human history.
Egyptian pharaoh source Business Hub
Ancient Beginnings
Gold, one of the most coveted metals in history, has captivated humanity for millennia. Its appeal can be traced back to ancient civilisations such as the Egyptians, Greeks, and Romans, holding immense cultural, economic, and aesthetic value.
In ancient Egypt, gold was revered as the “flesh of the gods,” symbolising divine power and immortality. Egyptians widely used gold for various purposes, including currency, jewellery, and religious artifacts. Pharaohs were often buried with vast amounts of gold, a testament to its
The Greeks, too, held gold in high esteem, associating it with gods and considering it indestructible due to its non-reactive nature. This perception elevated gold to a divine status, reinforcing its prominence in society.
Gold in Ancient China and India
In ancient China, gold held immense cultural and economic value. It was used for ornamental purposes, religious offerings, and even as a form of currency during various dynasties. The Chinese associated gold with prosperity and believed it brought good luck.
India has a deep-rooted cultural affinity for gold, considering it auspicious and a symbol of purity and prosperity. Gold is an integral part of weddings, festivals, and religious ceremonies, often passed down through generations as heirlooms.
The Spanish Conquest and the New World
During the Spanish conquests in the 15th and 16th centuries, significant gold reserves were uncovered in regions now known as Mexico, Peru, and parts of Central and South America.
Legends like El Dorado drove Spanish explorations, leading to the discovery of abundant gold, especially in present-day Colombia, Venezuela, and the famed silver mines of Potosí in Bolivia.
The influx of gold from the Americas significantly altered global gold supply, affecting trade dynamics and gold’s value worldwide. The wealth from the Americas financed wars, fuelled industries, and facilitated the rise of powerful merchant families, causing a price revolution and laying the foundation for modern banking systems.
History of Global Gold Production source Visual Capitalist
Gold Rushes and Exploration
The 19th century witnessed the phenomenon of gold rushes, forever altering the course of history. The California Gold Rush (1848-1855) and the Australian Gold Rush (1851) were pivotal events that ignited economic booms, sparking population growth and advancements in mining technologies.
These gold rushes acted as magnets, attracting people from around the globe in search of wealth. The influx of people led to the rapid development of cities, infrastructure, and entire economies in these regions, leaving an enduring mark on their landscapes.
In response to the surging demand for gold, miners and prospectors developed innovative mining technologies and techniques. These advancements not only revolutionised the mining sector but also had a broader impact, driving progress in industrial and engineering domains.
The Gold Standard Era
The late 19th and early 20th centuries witnessed the widespread adoption of the gold standard, anchoring the value of a nation’s currency to a specific quantity of gold. This system instilled confidence in the monetary system and promoted financial stability.
Under the gold standard, each unit of currency was backed by a fixed amount of gold held in reserve, providing a sense of security to holders of that currency. This ensured that the paper currency had tangible value tied to a precious metal.
However, the gold standard’s rigidity became apparent, especially during economic downturns. Governments found it challenging to implement flexible monetary policies to combat economic crises. Consequently, nations began transitioning away from the gold standard, opting for more adaptable monetary systems.
Fort Knox Gold Treasury source Daily Mail
Gold in the Modern Era
The 20th century, marked by the two World Wars, saw a surge in gold demand. Governments and individuals sought gold as a safe-haven asset during times of uncertainty. Post-World War II, gold played a crucial role in shaping the global monetary system, evolving into its significance in the 21st century as a safe-haven asset amid economic volatility and geopolitical tensions.
In recent years, gold has maintained its status as a safe-haven asset, particularly during economic downturns and geopolitical instability. Its value surged after the 2008 financial crisis, highlighting its resilience and enduring relevance in the modern financial landscape.
Gold’s Influence on the Modern Global Economy
Gold, often revered as a timeless symbol of wealth and prosperity, continues to wield immense influence in the contemporary global economy. Explore how this precious metal remains an enduring force, shaping the dynamics of the modern economic landscape.
Distribution of gold demand worldwide by sector in 2022 source Statista
The Significance of Gold Reserves for Central Banks
Central banks play a pivotal role in maintaining a stable modern global economy. Gold reserves held by central banks are a fundamental component, providing a solid foundation for economic stability and bolstering a nation’s creditworthiness. These reserves act as a safeguard, particularly during economic downturns and emergencies, instilling confidence in the financial system.
Key players in the global financial landscape, including the United States, Germany, and the International Monetary Fund (IMF), uphold substantial gold reserves. For instance, as of 2023, the United States holds the largest gold reserves globally, amounting to approximately 8,133 metric tons. Germany comes in second with about 3,355 metric tons, followed by the IMF with approximately 2,814 metric tons. These extensive holdings underscore gold’s enduring importance in the modern economic framework, showcasing its resilience and relevance.
Gold’s Role as a Safeguard against Economic Uncertainties
In the contemporary world, gold is universally acknowledged as a reliable hedge against economic uncertainty. Its historical status as a safe-haven asset is reinforced during times of economic turbulence, be it inflation, deflation, geopolitical instabilities, or financial crises. Investors turn to gold, seeking a secure investment that can effectively preserve their wealth in volatile market conditions.
Notably, the demand for gold escalates during economic crises, as it is perceived as a safe bet amidst market volatilities. For example, during the 2008 financial crisis, gold prices surged from around $800 per ounce in 2008 to over $1,900 per ounce in 2011, demonstrating its value as a safe-haven asset during tumultuous times.
Gold’s Multifaceted Role in the Modern Era
Gold’s influence extends far beyond its traditional role. In the contemporary global economy, gold plays a multifaceted and indispensable role. Gold is not only a store of value and a safe-haven asset; it’s widely used in different sectors, making it even more important.
In the realm of jewellery, gold is not just a symbol of opulence but also a representation of tradition and cultural significance. In 2022, the global demand for gold in the jewellery sector amounted to approximately 2,086 metric tons.
Its exceptional conductivity properties make it a vital component in the electronics industry, contributing to the production of various technological devices. Furthermore, its unique attributes make gold indispensable in specialised applications like aerospace technology and medical devices.
Golden Jewellery source Arabian Business
Factors Shaping Gold Prices
Numerous factors intricately affect gold prices in the global market, including supply-demand dynamics, economic indicators, geopolitical events, currency strength, central bank policies, market speculation, and industrial demand. Understanding these influences is crucial for comprehending gold market dynamics.
Supply and Demand: Gold prices respond to changes in gold production, recycling, central bank transactions, and demand from sectors like jewellery and industry.
Economic Factors: Gold can serve as a hedge against inflation, with higher inflation often boosting demand. Interest rates also impact gold prices, with lower rates making gold more attractive.
Geopolitical Events: Geopolitical tensions, conflicts, and trade disputes can drive investors to seek the safety of gold, elevating its prices.
Currency and US Dollar: Gold often moves inversely to the US dollar, becoming more appealing when the dollar weakens. It can also serve as a safe-haven currency.
Central Bank Policies: Monetary decisions and gold transactions by central banks can directly influence gold prices and market sentiment.
Market Sentiment and Speculation: Investor sentiment and speculative trading activities can result in short-term price fluctuations.
Industrial Demand: Gold’s use in electronics and industry impacts its price, with technological trends influencing demand.
In conclusion, comprehending gold’s historical journey unveils not only its economic implications but also its profound impact on our lives and businesses. Gold symbolises human creativity, resilience, and adaptability. It acts as a bridge across generations, a timeless emblem that continues to influence our world, connecting our past, present, and future. As we navigate the complexities of economics and trade, the enduring value of gold in the tapestry of humanity remains a constant and compelling reminder.
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On Monday, the stock market rebounded, with the Dow Jones Industrial Average closing 0.59% higher and the S&P 500 and Nasdaq Composite also showing gains despite earlier uncertainties tied to the Israel-Hamas conflict. The conflict, along with concerns about inflation and interest rates, led to initial market declines and a surge in crude oil prices. Major oil and gas companies, as well as defense companies, saw significant gains. While investors reacted with some knee-jerk moves, small-cap stocks in the Russell 2000 index increased, boosting confidence in the broader economy. In the currency market, the US dollar’s performance was mixed due to risk-off sentiment and changes in Federal Reserve rate expectations, with the Japanese yen emerging as a strong performer. Attention now turns to upcoming economic data releases that will shape market expectations.
Stock Market Updates
On Monday, the stock market rebounded despite earlier uncertainties linked to the Israel-Hamas conflict. The Dow Jones Industrial Average showed a notable recovery, closing 0.59% higher, gaining 197.07 points, and concluding at 33,604.65. The S&P 500 followed suit, with a 0.63% increase, ending at 4,335.66, and the tech-focused Nasdaq Composite climbed 0.39% to reach 13,484.24. Earlier in the day, all major indexes experienced declines, with the Dow shedding 153.89 points, the S&P 500 losing 0.6%, and the Nasdaq pulling back as much as 1.15% before rebounding. The Israeli-Palestinian conflict, which escalated over the weekend with Hamas launching an invasion and Israel responding, initially put pressure on the stock market. This geopolitical tension may impact the energy market, potentially causing a brief surge in crude oil prices, though the overall impact is expected to be limited. The conflict, combined with concerns about persistent inflation and higher interest rates, could lead to increased market volatility. On Monday, WTI crude oil futures increased by 4.3% to $86.38, while international Brent futures rose 4.2% to $88.15, marking their best performances since April 3. Gains were observed across all sectors, with energy and industrials leading, closing higher by 3.5% and 1.6%, respectively. Major oil and gas companies, as well as defense companies, also saw significant gains amid the conflict.
Lockheed Martin and Northrop Grumman, in particular, registered increases of 8.9% and 11.4%, respectively. Investors’ reactions to the conflict were initially marked by a rapid response, with the market closely monitoring the situation for more clarity on potential impacts. Analysts are keeping an eye on Iran, a major OPEC producer, to gauge crude oil movements as the conflict unfolds. Despite the initial uncertainty, some investors expressed confidence in the market’s ability to assess the impact of the attack over the weekend, and small-cap stocks in the Russell 2000 index increased by 0.6%, boosting confidence in the broader economy. With the bond market closed for Columbus Day, Wall Street awaits an update on interest rates until Tuesday. Additionally, investors are looking ahead to upcoming earnings reports, including those from companies like PepsiCo, Walgreens Boots Alliance, JPMorgan, and BlackRock, to gain further insights into the health of the broader economy.
On Monday, across all sectors, the market experienced a positive trend with a gain of 0.63%. Notable sector performances included significant gains in the Energy sector, which increased by 3.54%, and positive growth in the Industrials, Real Estate, and Utilities sectors, rising by 1.61%, 1.30%, and 1.01%, respectively. The Communication Services and Information Technology sectors also saw modest gains of 0.95% and 0.43%, while Health Care, Consumer Discretionary, and Materials sectors experienced smaller increases of 0.36%, 0.18%, and 0.15%, respectively. The Consumer Staples and Financials sectors had more modest gains of 0.07% and 0.03%.
Currency Market Updates
In recent currency market developments, the US dollar exhibited mixed performance. Initially, the dollar index saw a marginal increase, largely attributed to its role as a safe-haven currency during the ongoing conflict in Israel. However, as risk-off sentiment prevailed and Federal Reserve rate expectations took a significant dip, the dollar’s upward momentum waned. This shift was also influenced by a surge in energy prices, which benefited energy-exporting nations. The Japanese yen emerged as the strongest performer among G7 currencies, gaining against the dollar, euro, and sterling due to its status as a funding currency, supported by the Bank of Japan’s accommodative monetary policy. The USD/JPY pair saw a decline as Fed fund futures began pricing in a 17 basis-point reduction in the Federal Reserve rate by December 2024. This was driven by derisking flows and a perception that recent increases in Treasury yields reduced the necessity for further Fed tightening.
As investors closely monitored these developments, attention turned to upcoming economic data releases, particularly the US Producer Price Index (PPI) and Consumer Price Index (CPI) scheduled for Wednesday and Friday. These reports were deemed crucial for shaping market expectations regarding the Federal Reserve’s future monetary policy decisions and the support for the US dollar’s yield. The euro depreciated against the US dollar, with a potential bearish outlook if the sharp increases in crude and natural gas prices, which were driven by the escalating conflict in Israel, continued. Sterling managed to recover from its lows, influenced by risk-off sentiment and a drop in Fed rate pricing. Meanwhile, the Australian dollar rebounded after an initial risk-off slide, and the Canadian dollar also saw gains as oil prices rebounded, coupled with diminishing expectations of Federal Reserve rate hikes compared to the Reserve Bank of Australia and the Bank of Canada in the coming year. Notably, the Israeli shekel faced a significant devaluation of 2.65% despite the Bank of Israel’s announcement of selling up to $30 billion of foreign currency to stabilize the currency amid the ongoing war.
Picks of the Day Analysis
EUR/USD (4 Hours)
EUR/USD Holds Steady Below 1.0600 as Geopolitical Concerns Weigh on Euro
In the American session, the EUR/USD pair saw a modest rise but remained below Friday’s close, with the US Dollar’s weakness falling short of pushing it above 1.0600. Notably, the Euro underperformed compared to other G10 currencies due to new geopolitical concerns. The Euro faced additional pressure as the 10-year German bond yield dropped significantly. German Industrial Production data for August disappointed, and the Eurozone Sentix Investor Confidence also declined in October. Tuesday sees no major economic reports in either the Eurozone or the US, with attention turning towards the US Consumer Price Index later in the week.
Based on technical analysis, the EUR/USD went up on Monday and managed to move above the middle band of the Bollinger Bands. Right now, the EUR/USD is trading below the upper band, which suggests a chance for another upward to push the upper band of the Bollinger Bands. The Relative Strength Index (RSI) is at 58, indicating that the EUR/USD is currently in a neutral stance with a try to have a bullish bias.
Resistance: 1.0616, 1.0674
Support: 1.0530, 1.0460
XAU/USD (4 Hours)
XAU/USD Surges as Middle East Tensions Spark Safe-Haven Demand Amidst US Market Closure Gold prices opened the week with a significant gap higher, reaching $1,855.28 during Asian trading hours, driven by escalating tensions in the Middle East, with Israeli Prime Minister Benjamin Netanyahu declaring the country at war following a major attack by the Palestinian Hamas group. This unexpected situation led to increased risk aversion and a surge in demand for safe-haven assets, with Gold benefiting the most. While the US Dollar initially strengthened, it receded after London’s close, and the reaction of American markets to the weekend news remains uncertain as they are closed for Columbus Day. The week ahead will bring important US economic data, including the release of the FOMC meeting Minutes and the September Consumer Price Index, which is expected to offer key insights into inflation trends.
Based on technical analysis, XAU/USD moves high on Monday. It creates a push for the upper band of the Bollinger Bands. Currently, the price of gold is trying to push the upper band even higher. The Relative Strength Index (RSI) currently stands at 71, signaling a bullish bias for the XAU/USD pair.
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