Gold Market Wire
News, analysis and commentary for gold traders and investors
Precious Metals/FX Update
Until the US Dollar Rampage Abates, Expect Little out of The Metals
November 25, 2021 - (Gold Market Wire) - Maybe it really is a curse to live in "interesting times". These certainly are such times. Like fireworks, volatility can be both fun and dangerous. So, right now, we've had quite a bit of both. As the US settles in for a long holiday, the markets should calm, and we can assess where we are.
The US dollar action is compelling us and we are now facing the decimation of both the Australian and New Zealand Dollars (vs the US Dollar).
First Up Australia:
...and New Zealand:
This is historic stuff. The idea that a potential war over Taiwain could soon be in full flow has shattered the region's confidence. Capital flows are truly reflected in currency movements and stock markets. Where the money flows, the story is told. Moreover, one cannot reasonably expect a recovery of any sort. That would probably require a complete 'resolution' over the issue of Taiwan, which is now hanging over the region and enveloping it in dangerous uncertainty.
Yes, many will opine, these are somewhat 'peripheral' currencies. True. But the picture is no better in the big ones, like, namely, the Euro.
When we consider the above there is little conclusion that can be drawn other than the simple fact that regional, if not international war, and its imminent potential, is now embedding itself in the markets. That is the stark conclusion of these charts.
Gold has taken it on the chin, no doubt, but the rally preceding it was strong. The conclusion we draw is simply that the metals were getting ahead of themselves, relative to the US Dollar. After all the carnage, after all, we are simply back at our old resting ground of $1794 - yet again.
We don't feel like Metals have been mortally wounded. We wish we could say that about the other currencies. And that is really the picture at present.
Yesterday's board was one for the record books, and traders should heed it. The market, in preparation for a significant holiday break, squared and positioned itself as it saw fit. Monetary Mayhem and perhaps international war is at our doorstep. Money is running towards the US dollar as fast as it can go. Did the "US dollar is Finished!" crowd never anticipate this day?
In their myopia they appear to have missed it. Blinded by the reality of the market that still sees the US currency as the premier safe haven. In times where war looks imminent, that is where western capital will move.