Precise Investors Editorial Team
Gold was up 3% to $4,800 an ounce, while silver traded 5% higher to $83.34 an ounce
Gold and Asian stocks were on the rebound on Tuesday as trade took a calmer tone after wild swings in metals markets, with the mood helped by a sharp jump in U.S. factory activity, while the Australian dollar rose after an interest rate hike.
Australia’s central bank hiked this cycle and said above-target inflation and a tight labour market justified a unanimous decision to lift the cash rate 25 basis points to 3.85%.
Markets had mostly anticipated the move, though it was enough to push the Aussie nearly 0.8% higher and more than 70 cents.
Nikkei climbed 3% to recoup Monday losses and KOSPI added 5%. S&P 500 futures were up 0.1% with traders eyeing busy few sessions of earnings.
Gold, silver, stocks and the dollar have all whipsawed since U.S. President Donald Trump’s nomination of Kevin Warsh to lead the central bank sent metal prices tumbling.
Gold was up 3% in the Asia morning to $4,800 an ounce, a jump of around 9% from Monday lows. Silver traded 5% higher to $83.34 an ounce.
Warsh is seen shrinking the central bank’s balance sheet, pushing up bond yields, which is negative for precious metals that pay no income.
However, the dive in prices on Friday and on Monday went beyond fundamentals and was a wipeout for leveraged positions and sent tremors through global commodity and stock markets as traders sold other assets to bail out losing bets.
It was a flushing out of leverage in the system which has built up, said Christopher Forbes, head of Asia and the Middle East at CMC Markets.
He added: The bigger question is really on the true pain point from the gold and silver unwind. I’m not sure everyone will have made it.
Comments (0)
Average Rating: No ratings yet/5 (0 reviews)
No comments yet. Be the first to comment!