adminexperienced a rally in commodities especially gold and further anticipates gold to hit a three-month high above US$1 700 an ounce.
Analysts have predicted gold to hit a 12th year of gains as the European debt crisis boosts demand for haven amid speculation of further policy easing by the central banks. On such market news, investment holdings for gold will definitely expand on demand for hedge against inflation.
Investors are currently cutting bets on any US dollar rallies as Ben Bernanke’s speech beckons in Jackson Hole as they prepare to gauge the prospects for monetary policy.
What the Federal Bank says this week will definitely give direction to the market and certain portfolios will do well including stocks related to commodities. The euro held declines at US$1,2501 amid European politicians were getting closer to a resolution, but fell as the German business report failed to convince the market that the euro area is recovering.
The euro weakened by 0,3 percent to trade at US$1,2497 against the dollar but rose against the yen to trade at 98,440 yen. The US dollar declined by 0,2 percent against the yen to touch 78,770 yen.
For a while the eurozone has been quiet but that doesn’t mean the problems have gone away given the upheavals within the euro area. Greece still dominates headlines as European politicians have been urged to weigh their words.
The Spanish story has become an ECB issue as the central bank seeks to lower Spanish bond yields together with their borrowing costs. A continuing crisis in Europe and decelerating economies in emerging markets may weigh down on growth-related currencies so as commodities.
In China, the Chinese Premier Wen Jiabao has urged additional steps to support exports and help meet economic targets as evidence mounts that the slowdown is deepening.
The UK financial markets were shut down in observance a summer bank holiday on Monday. Despite all that sterling pound pared gains against the dollar and euro trading at US$1,5793 per dollar and 79,130 pence per euro.
The sterling pound will likely touch US$1,5809 against the dollar banking on mergers and acquisitions taking place in the UK likely to push the pound higher, stimulus being a catalyst as well.
In Australia, the Aussie dollar inched lower against the US dollar to trade at US$1,0381 as that barometer of global risk came into play. Gains in the Australian dollar against its US peer were tempered on global growth concerns.
South African Markets
As the risks get bigger and bigger failure to ease by the Federal Bank will definitely knock the rand lower than those current levels we are seeing. The rand inched lower by 0,6 percent to touch 8,4475 per dollar as we continue to see more weakness in the rand on a jittery market.
Since the rand touched 8,30s range hitting its lows of 8,3965 a three-wave upside correction has been completed and the market continues to extend the break lower. Continued weakness beyond 8,4475 will add a lot of credibility to a bearish case what it means rand will weaken further 8,50 could be its biggest level to weakness.
Commodity markets
Gold continues to surge on Fed stimulus hopes as an inflationary hedge. Gold held steady at US$1 664,15 an ounce as investors await a speech by the Federal Reserve chairman Ben Bernanke. Central banks have been hoarding gold of late as 245 tonnes of gold have been purchased in July alone and could double that going into September as the market anticipate Fed action.
Crude oil rose on supply concern as tropical storm Isaac continues to affect production to the downside. Crude oil was trading at US$95,65 per barrel. My chart of the day: Do you know where your money is ahead of this week’s Federal meeting?
l For more information contact Prodigy Chinanga on 0772753594 or email on [email protected].
Online Reporter