The price of gold this year, can stop the growth of

  • And
  • +A

One of the most discussed and urgent topics – the unexpected correction in gold, which, apparently, caught many by surprise. As of 14:00 Moscow time the precious metal is trading at $1286,25 per Troy ounce. This is a correction of 4.5% from its high of $1348/oz, reached on February 20-21, although yesterday the drop and slowed down.
There are several reasons. First, as we have already mentioned, that is a consequence of the announcement of trump’s recent round of negotiations with China on trade issues “successful”. The American traders hope that China traces of compromise on trade with the United States will stop aggressive purchases of physical gold and return to buy “treasuries” greatly undermined belief in the continued rampant “bull” game at first. Repeat that such an option would really be possible if the monetary policy of the fed was not on so obvious a crossroads: an increasing number of investors do not exclude that it may even be a reduction of the key rate instead of the “single improvement” for 2019.
Next, don’t forget about the annual cycles of precious metals. Given that last year the next phase of growth, “yellow metal” started late: not in area of July-August, as usual, and only at the end of October – it was logical to expect that all of it moves to the right along the time scale, which is what happened. The rally usually ends at just before the coming of the new year according to the Lunar calendar in China which is celebrated in February. In preparation for this, in advance a “left” of that position, but gold all deceived, and after an easy short correction in early February, again rushed to the conquest of the peaks, as if preparing a surprise gift for Russian men traders on February 23.
Many investors are surprised and, after weighing “for” and “against”, decided to reopen the position in the calculation of take-profit at $1350oz to which the precious metal slightly fallen short. Thus, for most of these generalized us “many” the most urgent question is only one: will it be possible to close the gold at the end of this year in the black. We believe that in this sense it is possible not to worry: gold has a lot of reasons why it not only can, but must renew off-cycle growth, and too little reason for further correction.
In particular, in the context of the domestic political agenda in Washington with the potential at least to weaken the dollar – and it is mentioned in previous reviews the exhortations of the President of trump about the “dollar, which does not support American industry,” and a new (well forgotten old) the theme of anticipation of heated battles between the President and Congress around the inevitable vote on the raising the “ceiling” of government debt. It is noteworthy that the Minister of Finance of the USA Stephen Mnuchin, obviously realizing that the question is “like butter” will not be solved, introduced the regime of “emergency funding” of the government’s work until 30 September of the current year.
Thus, it appears that in the US at the moment announced two state of emergency – for the funding of the trump building walls on the border with Mexico, and because of the approaching date threshold of borrowing on the public debt. And someone thinks that this situation does gold have any reason to “get lost” in the markets unnoticed?
Returning to the subject of the currency, the dollar and the Euro remain largely stable, despite the mixed results of the placement of sovereign bonds OFZ Finance Ministry, the increased activity of the Central Bank buying dollars in reserve funds, and also initiated the US state Department investigation into the origin flowing and tekavcic in the past of the Russian capital (no need to thank me, you say?).
Against the background of stable oil, the ruble will be in ever increasing proportion to support the approach of the annual tax period, which will require a very large buying rubles. This purchase will certainly cover the monetary activity of the Central Bank, therefore, market participants in the bulk do not see immediate threats to the domestic currency. As of 14:30 GMT against the dollar, the ruble was trading at 65,82, and in tandem with the Euro – 74,40. It is a nothing.
____________________________
Vladimir Rojankovski,
Expert
“International Financial Center”