Head of Commodity Strategy
Summary: Gold is currently consolidating having made it back to relative safety above $1850/oz, silver has struggled to break above $24.80/oz, while copper maintain support from strong underlying fundamentals. We have entered the time of year where profits are being defended and where lack of momentum can cause some major price swings. Markets currently lacking momentum are precious metals and more recently also platinum while copper has yet to break levels that may cause a sweat.
Gold is currently consolidating having made it back to relative safety above $1850/oz, the level below which triggered a recent slump to $1764/oz. The news flow continue to be dominated by encouraging vaccine developments, stimulus talks in the U.S. and Brexit talks in Europe. Vaccine rollouts, initially in the U.K. and soon across the Europe and the U.S. have so far been offsetting the potential for more stimulus in Europe, Japan and not the least the U.S. being added to the unprecedented amounts already having been applied to prop up economies this year.
We have, however, entered the time of year where profits are being defended and where lack of momentum can cause some major price swings. Markets currently lacking momentum are precious metals and more recently also platinum while copper still look well supported following its latest run higher.
The dollar meanwhile remains on the defensive while also highlighting the risks of an increasingly one dimensional markets with the lower dollar argument being almost entirely bound up in soaring risk appetite. The bond market is currently not sending a clear signal with the yield on U.S. 10-year Notes holding below 1%. Yesterday’s 3-year Treasury auction was weak and we have 10-year and 30-year auctions up today and tomorrow, respectively. Against the risk of rising nominal yields we still find real yields stuck deep into negative territory and yesterday the ten-year real yield temporarily dropped below -1% for the fist time since October.
Yesterday saw the first increase in flows into exchange-traded funds backed by bullion. The 118,000 ounce addition was the first noticeable increase in almost one month. During this time investors have reduced total holdings by 418,000 ounces or 3.8%. While the key level of gold support can be found at $1850/oz. the next level of resistance is $1883/os, the 38.2% retracement of the August to November correction, followed by $1900/oz.
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
Market Strategist
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.
Peter Siks,
Investment Coach
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
Jessica Amir,
Market Strategist
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.
Mads Eberhardt,
Cryptocurrency Analyst
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)
