Gold and copper market is most likely to remain extremely sensitive along with major currency pairs in the upcoming weeks.
The recent presidential election has created massive chaos in the financial market in the last week and investors are overly cautious since Donald Trump has taken the responsibility for the U.S government defeating Mrs. Clinton. There was supposed to be a strong bearish sentiment in the market since Mr. Trump is mostly against international trade and his anti-social policies also directly affects the growth of green bucks. However, the green bucks gained immense strength on the newly elected president which was totally an unexpected event in the financial world. On last Friday the gold price slipped lower to five months low indicating that trump is not significantly bad for U.S economy. According to New York Mercantile Exchange, the price of gold settled down to 3.10% at $1227.15 per ounce. This is considered to be the lowest settlement in the gold price since 6th march 2016.The increased fiscal spending and tax cuts under the supervision of Mr. Trump boosted the market sentiment to a great extent indicating a strong possibility of economic growth and the well-balanced inflation rate in the near term future. The ongoing interest rate hike decision by the FED also created immense pressure in the financial industry which ultimately drove down the price of gold since the FED is most likely to hike their interest rate in the month of December. Previously the proximity of rate hike by the FED in the month of December was only 67.3% which has now increased over 80% focusing the recent presidential election and ongoing stable performance of the U.S economy over the last couple of month.
On last Friday the U.S dollar index reached nine-month high which is considered to be the largest weekly gain since November 2016.The gain was near about 2.02% which gave the mighty green buck’s immense strength in the financial market. Since gold is priced in the dollar it becomes way more expensive for the investors of other currencies to trade the gold since the value of the dollar significantly went up in the last week. To be precise the U.S consumer sentiment is extremely positive at the current circumstance and the FED is most likely to hike their interest rate in the month of December. According to some leading U.S economist, if the FED again postponed their rate hike decision in the month of December then there is strong chance that the county will suffer from an extreme level of inflation problem with the next few months. For better accuracy and precise assumption, the FED Rate Monitor Tool has already given us a precise data about the rate hike decision by the FED in the month of December. According to them, there is 81.1% chance that the FED will hike their interest rate with a hawkish statement in the month of December which is definitely going to fuel up the green bucks for the next year. The rate hike is going to affect the gold market extensively since the price of gold is extremely sensitive to the rate change decision by the FED.To be precise all the precious metal is going to effect by the rate hike by the FED in the month of December. For instance, the price of silver was settled down to 7.5% at 17.33 per ounce which is just the result of the stronger U.S dollar.
The precious metal, copper was having a strong rally in the market but the price of copper fell sharply on the last Friday in the event of a presidential election. The price of copper for the month of December settled at $2.50 a pound on the Comex. But before the settlement of the price of copper it rocketed to a high of $2.73 a pound before Mr. Trump get selected as the U.S president. However, the price of copper was again boosted up after Mr. Trump announce that the infrastructure spending is going to be increased in the upcoming days. The price also got underpinned focusing the recent strength in the demand line of Chinese production. Considering all the major event the investors are patiently waiting for the FED chairman Janet Yellen testimony in order to extract some sort of hint regarding the rate hike decision in the month of December. If Janet Yellen comes up with a positive testimony then the Green buck is going to exhibit a significant amount of strength in the financial market till the FOMC meeting minutes. On the contrary, Japan is going to release their third quarter growth preliminary figure and the U.S, Canada, and the U.K are yet to release their data which is going to be one of the major watching points for the investors since it will indicate the inflation rate of the economy to a great extent. These important event is going to affect the stock and currency market significantly since these are the most important leading indicators in the market which act as the price driving catalyst for a prolonged period of time.
On 14th of November Japan is going to release their preliminary data on third quarter economic growth and this will most likely cause a massive impact in the Japanese pair in the financial market. Along with this major news releases, ECB President Mario Draghi is also going to deliver his speech which might erase the loss of EURO in the last week. On the contrary, the kiwi economy was doing extremely well against its all major rivals on the last couple of months so if the retail sales data comes out positive on Tuesday we might see some fresh buying pressure in the kiwi pair. On 15th of November, the Reserve Bank of Australia is going arrange their monetary policy meeting which might again shake the Aussie dollar to a great extent. Investors are casualty waiting for the RBA monetary policy meeting minutes to extract useful trading information. To be precise this week has nothing to offer to the mighty U.S dollar but the other major currency pair have very important news release in the upcoming week for the investors.