GOLD, XAU/USD, US Dollar, Crude Oil, WTI, Brent, NZD/USD, RBNZ, RBA – Talking Points
- Gold gouged out a solid gain after the US Dollar resumed weakening
- NZD stacked on more gains after a hawkish hike from the RBNZ
- Treasury yields dipped and if real yields fall further, will it boost XAU/USD?
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Gold jumped to a 13-month high overnight after the US Dollar sunk along with Treasury yields. The benchmark 2-year note touched 3.82%.
The yellow metal peaked above USD 2,025 today while industrial metals such as copper and iron ore continued to tumble.
Gold may have been boosted by US real yields sliding lower with the 10-year gauge dipping under 1.10%, a long way from the 1.72% seen just last month. The US Dollar appeared to be undermined by weak factory orders and jobs data. The details can be read here.
Crude oil has held onto gains made on Monday after OPEC+ announced output cuts of 1.1 million barrels per day over the weekend. The WTI futures contract is near US$ 81 bbl while the Brent contract is a touch above US$ 85 bbl.
Crude was underpinned by inventory data from the American Petroleum Institute (API). It revealed a drawdown from the US strategic petroleum reserve (SPR) of -4.346 million barrels instead of the -1.8 million barrels forecast.
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APAC equities were mixed but mostly slightly lower after a sluggish lead from Wall Street. Japan’s Nikkei 225 is a notable underperformer, down over 1.5%. Futures are pointing toward a subdued start to the European and North American cash equity sessions.
The Kiwi Dollar has been the big mover in currency land today. It made a 7-week high at 0.6380 after the Reserve Bank of New Zealand startled the market by hiking their official cash rate (OCR) by 50 basis points (bp) rather than the 25 bp anticipated.
The RBNZ hike comes a day after the Reserve Bank of Australia (RBA) paused in its hiking cycle. RBA Governor Philip Lowe said today, “we may have to move interest rates higher but we’re not 100% certain of that.” He also remarked, “I think it is premature to be talking about interest rate cuts, it’s way too early to look at cuts.”
Looking ahead, after a slew of European PMI numbers, the US will see data on mortgages, jobs, trade and their own PMI figures.
The full economic calendar can be viewed here.
GOLD AGAINST USD DOLLAR (DXY), 10-YEAR REAL YIELD AND VOLATILITY
Gold has moved up at the same time that the US Dollar and US 10-year real yields have gone lower, and volatility has ticked up.
Chart created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCathyFX on Twitter
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