Gold, XAU/USD, US Dollar, China, Crude Oil, RBA, AUD/USD, ECB, EUR/USD - Talking Points
- The gold price appears to be looking for direction with volatility rolling over
- The RBA kept its cash rate at 4.10% and traders sold AUD/USD on the news
- Some hawkish ECB comments had little impact on Euro. Will more rhetoric boost EUR/USD?
The gold price has steadied going into Tuesday’s trading session as markets appear somewhat lacklustre with the US out for a holiday.
Treasury yields have held onto the gains seen going into the end of last week with the benchmark 10-year bond trading near 3.85%. The policy-sensitive 2-year note is back above 4.90% as markets await the Fed meeting minutes that will be released on Wednesday.
Further hopes of an easing in tensions between the US and China took a hit today after Beijing announced restrictions on the export of gallium and germanium.
The metals are vital for semiconductors, telecommunications and electric vehicles. The move appears to be retaliatory measure for the US promoting chip restrictions to China.
Crude oil firmed after Saudi Arabia and Russia vowed to extend their cuts in production ahead of the OPEC+ meeting in Vienna this week. The WTI futures contract is oscillating around US$ 70 bbl while the Brent contract is nearing US$ 75 bbl. Live prices can be found here.
The RBA paused in its rate hike cycle today, leaving the cash rate target unchanged at 4.10%. AUD/USD went lower while the ASX 200 found firmer footing on the news.
Japan’s Nikkei 225 equity index dipped with USD/JPY going slightly lower. Other APAC equities have had a quiet session.
EUR/USD is little moved so far today despite yesterday’s hawkish comments from Joachim Nagel, Bundesbank President and European Central Bank (ECB) policymaker.
Mr Nagel will be speaking again today as well as fellow ECB Governing Council member Yannis Stournaras. ECB President Christine Lagarde will be speaking on Friday.
The full economic calendar can be viewed here.
GOLD PRICE ANALYSIS
The rudderless gold price so far this week might be put down to a US holiday, but it is lacklustre performance is supported by lower volatility as measured by the GVZ index.
The GVZ index measures the implied volatility across a gold exchange-traded fund (ETF) in a similar way that the VIX index measure volatility across the S&P 500 equity index.
The DXY (USD) index has also been in a sideways price action this week and the inflation-adjusted return on the 10-year Treasury note (real yield) also appears to be waiting for the US to return from holiday.
--- Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter
