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Macro trading commodities precious metals
Macro trading commodities precious metals











macro trading commodities precious metals

Where are precious metals likely headed from here, then? We can see on the charts below via Deutsche Bank the relationship between the market’s pricing of future Fed rate hikes and the resulting moves in precious metals which move inversely to these expectations.

  • Since they control the cost of money and by extension the value of the dollar, what they do and what they signal they’re going to do, matter for precious metals.
  • One of the largest influencers on these beliefs is of course the Game Masters (the Federal Reserve ).
  • And as a result, beliefs and resulting actions about the risks in holding assets that are priced in currencies other than the dollar.
  • So much of the movement in precious metals is centered around beliefs about the future value of the dollar.
  • In this case, capital flows into EM countries which leads to a lower dollar, higher commodity prices, higher inflation, and thus lower real rates which is bullish for precious metals. It’s where EMs are seen as more stable and an attractive investment, at least on a relative basis to core markets.
  • A periphery led rally is the opposite.
  • This helps drive the dollar higher and keeps inflation low, both of which are bearish for precious metals. This typically coincides with a global risk-off view where EMs are deemed too risky so capital pools into safer DM markets.
  • A core driven rally is when the US (and typically other DMs) are the market leaders relative to emerging markets (periphery).
  • The performance of precious metals over cycles is largely dependent on whether we’re in a “core” driven rally or “periphery” driven rally.
  • Real interest rates move off of growth and inflation both realized and expected.
  • #MACRO TRADING COMMODITIES PRECIOUS METALS DRIVER#

    A big driver then is the relative changes in the cost of money or the real rate of interest (interest rates adjusted for inflation).

    macro trading commodities precious metals

    And the fundamentals that drive the dollar higher tend to drive them lower. Since they are priced in US dollars they tend to move inversely to the greenback. We can view gold and silver as anti-dollars.If the market price of gold moves a long way from this level, it may indicate a buying or selling opportunity.” Like Ray Dalio has said, “Over the long run, the price of gold approximates the total amount of money in circulation divided by the size of the gold stock.Here a quick rundown on how I think about precious metals. They’re coiling in a tight pattern and look set for an explosive move in one direction or another.īelow is XAU the gold and silver index on a weekly basis. I’ve been keeping a close eye on precious metal stocks. As the name states, I’ll be sharing something daily except for some days when I don’t. Daily Speculations are for me (Alex) to share some quick thoughts on charts/trades I’m looking at, books and articles I find interesting, or maybe just some photos of my dog Mars.













    Macro trading commodities precious metals