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Thursday, March 15, 2018

In currency wars, winning the gold

Gold rises amid weakening dollar against global currencies after the statements of the head of the fed. The price is already above $ 1,200 per Troy ounce. Investors are thus saved from the crisis. Now is the time to buy dollars and gold coins or investment, experts say, and explain why.

Gold rises amid weakening of the dollar after statements by the fed, and its price is already above $ 1,200 per Troy ounce. Thus, the cost of the April gold futures on the new York stock exchange Comex this morning grew by 12.5 dollars, or 1.05%, to $ 1,207 per ounce. The cost of the March futures for silver climbed by 0.58% to to 15.37 USD per ounce.

“Where have the billions of inhabitants of China who began to trade on the stock market? They travel to neighbouring countries in South-East Asia and there are buying up gold”

The main reason is the weakening of the dollar against most world currencies. This happened after the head of the U.S. Federal reserve Janet Yellen said that the fed if necessary to increase the policy rate slower than planned amid several challenges facing the country’s economy.

“A more cautious tone, Yellen and the emphasis on higher global risks, especially in China, suggests that the further pace of raising interest rates will be very gradual”, – quotes Agency Bloomberg, Societe Generale analyst Mark Keenan (Mark Keenan).

A weaker U.S. currency has a positive effect on the price of gold, making it cheaper for holders of other currencies. In addition, the rising gold price was caused by the demand for safe assets. Investors again became wary of low growth in the global economy and fluctuations in the oil market.

From the beginning of 2016 the price of the precious metal has risen more than 14%, remaining above the maximum mark from June 2015.

“The gold since the beginning of the month, when the current rally, gained 8.5% from the lows of December, the increase in price is 16%. These lows coincided with the decision of the ECB to lower rates and extend the terms of the QE program (quantitative easing). And only the gold investors understood the policy easing of the ECB as potentially raising inflation,” – says financial analyst FxPro Alexander Kuptsikevich.

The statement of the head of the fed, on the one hand, led to the weakening of the dollar, however, is not allowed to collapse the dollar on all fronts. So, if the yen, the dollar fell to its lowest levels since the end of October 2014, when the Bank of Japan expanded its quantitative easing program, the Euro paired with the dollar is seen as a more profitable currency. “However, the index of the dollar against the Euro is at the lowest levels since October 22, 2015. This means an almost complete pullback to the levels seen when the ECB just hinted that he is ready to ease its policy in December”, – said Kuptsikevich.

The Russian ruble after the positive on the eve of Thursday continued to weaken, as under the pressure of negative dynamics of oil prices. Dollar with the expectation of tomorrow adds to 1.32% 79,59 and worth of the ruble, the Euro rose to 1.75% up to 90,10 ruble.

In the last year and a half, a special role for markets plays policy of the Central banks of Europe, Japan and the USA. In March (10, 15 and 16 March) the ECB, the BOJ and the fed needs to make statements that may once again push markets and assets to rally. “Apparently, the date of the exchange will maintain the current trends in which the demand for security completely negates the efforts of the ECB and Bank of Japan to weaken their own currencies, and generates an outflow from the dollar, which grew on the speculation surrounding the divergence of monetary policy the fed started to normalize,” – says Kuptsikevich.


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