1:55 AM
After the first six months of 2018, the luster of gold did not fade. On the contrary, the yellow metal rose, not all as expected, did not win the strong Trump dollar. Gold was the biggest beneficiary of the US interest rate hike. Which is a coup in the economic base fixed in the minds of almost all economists, has changed this rule? Or does gold no longer care about the dollar? Or what happens?
In the beginning, gold is the most important and most valuable precious metal, and the acquisition of gold is a constant desire of individuals and countries - central banks - and is the most important part of the reserves of countries, because of the material value and moral enjoyed by the yellow metal, American interest, and political events in the world.
The relationship between gold and the dollar is inverse. The demand for one increases when the price of the other rises. This relationship is that gold is one of the most important hedge instruments against the risk of change in the exchange rate. Investors use it to cover the risk of weakening the dollar. Safe haven or security haven for investors, and gold speculation is always linked to the economic risks in the world which are the main factor in the demand for gold at the moment.
By the end of last year, all expectations were in the interest of the dollar. The worst for the financial markets, according to analysts, ended in 2016, as the year passed with major events, which helped the collapse of economic indicators and the recovery of gold, we saw Britain's sudden exit from the European Union, Voting on the Italian constitution, the victory of Donald Trump, raising American interest, Turkey's military coup, continuing tensions in the Middle East, terrorist attacks in Europe, and so on.
In the beginning, gold is the most important and most valuable precious metal, and the acquisition of gold is a constant desire of individuals and countries - central banks - and is the most important part of the reserves of countries, because of the material value and moral enjoyed by the yellow metal, American interest, and political events in the world.
The relationship between gold and the dollar is inverse. The demand for one increases when the price of the other rises. This relationship is that gold is one of the most important hedge instruments against the risk of change in the exchange rate. Investors use it to cover the risk of weakening the dollar. Safe haven or security haven for investors, and gold speculation is always linked to the economic risks in the world which are the main factor in the demand for gold at the moment.
By the end of last year, all expectations were in the interest of the dollar. The worst for the financial markets, according to analysts, ended in 2016, as the year passed with major events, which helped the collapse of economic indicators and the recovery of gold, we saw Britain's sudden exit from the European Union, Voting on the Italian constitution, the victory of Donald Trump, raising American interest, Turkey's military coup, continuing tensions in the Middle East, terrorist attacks in Europe, and so on.
Apart from the narrative, all these factors were a major reason that gold ended the year 2016 with its first annual gain since 2012, although the yellow metal fell sharply following the victory of Donald Trump in the US presidential election in November. It fell 12% in the fourth quarter, but a strong start to gold in 2016 helped to end the yellow metal last year up 8.5%.
Dollar
We mentioned that there is a close correlation between gold and the greenback, as the dollar's appreciation increases the cost of gold to other currency holders, while the increase in interest rates leads to higher bond yields, which limits the demand for non-yielding gold and increases US interest twice within 3 months , All expectations were in the interest of the dollar, which did not happen, as the green currency continued to fluctuate during the first quarter of this year.
The Federal Reserve's New York Federal Reserve Chairman William Dudley said the central bank was not rushing to tighten monetary policy. James Bullard, the Federal Reserve chairman, "I do not think we need a major adjustment of monetary policy at this point in order to stay on track and keep inflation near the target," he said.
Another reason for the volatility of the US currency is the expectation that Federal Reserve Chairman Janet Yellin will pursue a sharp austerity policy towards the interest rate by increasing the rate at a higher rate, which did not happen at the last interest rate hike. The dollar is reviving, but markets are not reacting enthusiastically if events are below market expectations.
Dollar
We mentioned that there is a close correlation between gold and the greenback, as the dollar's appreciation increases the cost of gold to other currency holders, while the increase in interest rates leads to higher bond yields, which limits the demand for non-yielding gold and increases US interest twice within 3 months , All expectations were in the interest of the dollar, which did not happen, as the green currency continued to fluctuate during the first quarter of this year.
The Federal Reserve's New York Federal Reserve Chairman William Dudley said the central bank was not rushing to tighten monetary policy. James Bullard, the Federal Reserve chairman, "I do not think we need a major adjustment of monetary policy at this point in order to stay on track and keep inflation near the target," he said.
Another reason for the volatility of the US currency is the expectation that Federal Reserve Chairman Janet Yellin will pursue a sharp austerity policy towards the interest rate by increasing the rate at a higher rate, which did not happen at the last interest rate hike. The dollar is reviving, but markets are not reacting enthusiastically if events are below market expectations.
0 التعليقات:
Post a Comment