News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • WTI crude oil prices extend gains on positive vaccine news and the kickoff of the US presidential transition process. An Astra-Oxford coronavirus vaccine could be deployed as soon as next month following successful clinical trials, marking a third promising candidate in a month. https://t.co/blvE4cTHqu
  • 🇫🇮 Unemployment Rate (OCT) Actual: 7.4% Previous: 7.6% https://www.dailyfx.com/economic-calendar#2020-11-24
  • Heads Up:🇫🇮 Unemployment Rate (OCT) due at 06:00 GMT (15min) Previous: 7.6% https://www.dailyfx.com/economic-calendar#2020-11-24
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 94.04%, while traders in NZD/USD are at opposite extremes with 73.89%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/vXLz7kjiM8
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.63% 🇦🇺AUD: 0.40% 🇨🇦CAD: 0.30% 🇪🇺EUR: 0.08% 🇨🇭CHF: 0.06% 🇯🇵JPY: 0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/abCq8SaK0H
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.93% US 500: 0.83% Germany 30: 0.67% France 40: 0.63% FTSE 100: 0.48% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2VKcUkmow6
  • The US Dollar extended breakouts against the Singapore Dollar and Malaysian Ringgit. USD/IDR and USD/PHP are more resilient as they idle around key support zones. Get your market update from @ddubrovskyFX here:https://t.co/SNMMCF4hh0 https://t.co/yVZlX5XALy
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your USD/CHF market update here:https://t.co/m2hAK8TiMS https://t.co/qjxm6K3qzT
  • The Japanese Yen looks set to continue moving higher against the British Pound. However, the higher-beta Australian and Canadian Dollars may claw back lost ground. Get your $JPY market update from @DanielGMoss here:https://t.co/nArIhBXFnK https://t.co/7tMcTgdV3v
  • Wall Street Futures Update: Dow Jones (+0.91%) S&P 500 (+0.79%) Nasdaq 100 (+0.56%) [delayed] -BBG
Gold Slammed on Government Shutdown

Gold Slammed on Government Shutdown

2013-10-01 21:50:00
John Kicklighter, Gregory Marks,
Share:
  • Gold dropped 3.0 percent Tuesday below the $1,300 market
  • The drop from the precious metal is a surprise given the US Government shutdown
  • A drop from the precious metal contradicts its value as an alternative store of wealth

Gold tumbled Tuesday as the prospect of a government shutdown became a reality for the first time in 17 years. Congressional leaders failed to meet a midnight deadline to push through an agreeable stop-gap bill that would keep the government funded. Multiple votes between the House of Respresentatives and Senate came to a sticking point in the repeal of the Affordable Care Act (colloquially referred to as ‘Obamacare’). The Republican-led House refused to pass a bill without a delay (originally a call for a complete repeal) of the Obamacare program that officially launched this past session. Meanwhile, the Democrats-held Senate rebuffed any discuss of the already-passed program.

For gold’s part, the metal plunged just over 3.0 percent. That is perhaps one of the most remarkable moves in volatility terms from assets with sensitivity to yields and fiscal uncertainty. The only problem is that it contradicts what would typically be expected of the metal…

Gold_Slammed_on_Government_Shutdown_body_Picture_5.png, Gold Slammed on Government Shutdown

Historically, gold is expected to play rather clear cut fundmental roles: safe haven, inflation hedge and alternative store of wealth. The government shutdown has its pricing influences, but it isn’t a key driver. The ‘alternative store of wealth’ appeal, however, should theoretically increase substantially with this development. Yet, as we can see below, the US dollar and gold have moved lower in concert (the greenback is flipped upside down to better illustrate its relationship) and how usually that relationship is.

Gold_Slammed_on_Government_Shutdown_body_Picture_6.png, Gold Slammed on Government Shutdown

Looking more closely at the need for an alternative store of wealth, US 5-year credit default swaps (CDS) – which are insurance against the possibility that the US government will not pay its debts – have risen sharply at the same time gold extends its slide from late August.

Gold_Slammed_on_Government_Shutdown_body_Picture_7.png, Gold Slammed on Government Shutdown

Meanwhile, the metal’s safe haven appeal has long ago derailed. As market’s generally settle between major themes, the general relationship has improved but the correlation is far from robust.

Gold_Slammed_on_Government_Shutdown_body_Picture_8.png, Gold Slammed on Government Shutdown

Why is this historic safe haven and frequent ‘currency’ contradicting these fundamental roles? The metal has seen its appeal significantly diminished this year due to the incredible jump in volatility in April and June. A safe haven and alternative store of wealth shouldn’t drop 14 percent in the span of two days. Furthermore, in a world where market participants are chasing fleeting returns, a metal like gold that does not offer any yield carries limited attraction.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES