Share:

After a strong run higher last week, this time out its been far more steady for equities, with most major stock markets trading not far from where they ended last Friday. Having said that, some news out this morning has threatened to cause some weakness into the weekend with a batch of data from the far east coming in worse than expected.

Chinese industrial production in particular was soft, with a year-on-year increase of 5% marking the lowest reading for this metric in 17 years and further supporting the notion of a slowing global economy. The release has caused European stock markets to fall lower while US futures also trade in the red in a small (so far) but broad risk-off move that has seen safe havens such as the Japanese Yen and Gold the biggest beneficiaries.

Gold hits highest level since April 2018

The largest market reaction to the Chinese data can be seen in Gold with the market jumping over 1% in response. The price of bullion has moved up to its highest level since April 2018 and at $1355/oz the market is only just over 1% from the 2016 peak. If the market can get up to $1390/oz then you have to go back to 2013 to find a higher price. The Chinese national stats bureau have since attempted to play down the significance of the poor data, but it's pretty obvious that their economy is slowing. Moreover, given the past lack of credibility associated with economic data from Beijing, the true figures could well actually be even worse.

Perfect storm brewing for Gold?

Perceived safe haven assets such as precious metals often thrive in periods of risk aversion and with US bond yields falling further it seems investors are becoming increasingly pessimistic about future growth prospects and at the same time expecting the US central bank to deliver a first rate cut in over a decade in the not too distant future.

The current economic climate could be seen as highly conducive for Gold bugs with a slowing economic growth and rising expectations of Fed rate cuts potentially providing a perfect storm for the precious metal.

Share: Feed news

CFD’s, Options and Forex are leveraged products which can result in losses that exceed your initial deposit. These products may not be suitable for all investors and you should seek independent advice if necessary.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD hovers around 1.0850 ahead of US data

EUR/USD hovers around 1.0850 ahead of US data

EUR/USD is ranging at around 1.0850 in the European session on Tuesday. The pair stays supported amid a broadly subdued US Dollar and hawkish comments from ECB President Lagarde. The focus now shifts to the high-impact US economic data. 

EUR/USD News

GBP/USD holds steady below 1.2700, BoE-speak, US data eyed

GBP/USD holds steady below 1.2700, BoE-speak, US data eyed

GBP/USD is keeping its range trade intact below 1.2700 early Tuesday. A softer US Dollar and a cautious market mood are contributing to the bull-bear tug-of-war, as traders await the speeches from the BoE and the Fed policymakers alongside the US macro news. 

GBP/USD News

Gold price remains within striking distance of two-week high ahead of US macro data

Gold price remains within striking distance of two-week high ahead of US macro data

Gold price (XAU/USD) catches fresh bids following the previous day's modest downfall and remains well within the striking distance of over a two-week high touched last Thursday. 

Gold News

XRP price recoups losses as Ripple gears up to reveal blockchain roadmap for 2024

XRP price recoups losses as Ripple gears up to reveal blockchain roadmap for 2024

XRP price is influenced by the developments in Ripple and the updates in the SEC v. Ripple lawsuit. The altcoin climbed past the $0.56 level as the XRPLedger prepares to unveil its roadmap for 2024.

Read more

Calm before the data

Calm before the data

It feels like there is a moment of calm and silence in the aftermath of major tech earnings, investors will decide whether this rally deserves to continue higher straight away. 

Read more

Majors

Cryptocurrencies

Signatures