Another Repo Market Liquidity Injection for Gold Bulls to Cheer
Last Thursday, the New York Fed added more than $80 billion in fresh temporary liquidity to the financial markets. Move over folks, nothing to see here – but what does it mean for gold prices?
Repo Crisis Is Not Over
Last week on Thursday, the New York Fed added $83.1 billion in temporary liquidity to financial markets. And banks’ demand for liquidity flared up again on Tuesday. If you haven’t heard of it, don’t worry – almost no one did. After all, journalism is about covering important stories… with a pillow!
The Fed not only injected some fresh liquidity, but also noted that it “may keep adding temporary money to markets for longer than policy makers had expected in September,” at least through April. So much for the normalization of monetary policy…
Please look at the chart below. It shows the Fed’s balance sheet in 2019. Although the US central bank has managed to shrink its assets a bit compared to the peak of $4.516 trillion from early 2015, the quantitative tightening has ended quickly. Read more...
Gold comes under pressure and drops to lows around $1,550/oz
The improved sentiment in the risk-associated space is now motivating the ounce troy of the precious metal to slip back to the $1,550 area, or daily lows.
Gold weighed down by USD, risk
The yellow metal is extending the choppy performance so far this week amidst the better mood in the riskier assets, particularly following the recent signing of the ‘Phase 1’ trade deal between China and the US.
Also adding to the ongoing pullback, the greenback has regained some buying interest on the back of above-estimates results from Retail Sales, the Philly index and Initial Claims, which have somewhat reversed the pessimism following December’s inflation figures (released earlier in the week). Read more...
Gold Violates Bearish Channel - Is It Going Higher to 1,561?
On Thursday, the precious metal gold prices are trading bullish around 1,556 area amid weakness in the U.S. Dollar. The dollar pushed up the foreign market for dollar-denominated gold. Lower demand for risky assets and a dive in U.S. Treasury yields also boosted the market.
Gold's demand despite the faded uncertainty as China pledged not to force U.S. companies for technology transfer in exchange for access to its market. Both countries assured not to devalue their currency to benefit their exporters. From 2022 to 21, China will buy at least $200 billion more of U.S. products & services than it did in 2017. The deal, however, leaves in place 25% tariffs on $250B goods of Chinese industrial products used by U.S. manufacturers. Read more...
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