Greg Gibbs, Founder, Analyst, & PM, (AmpGFX), Amplifying Global FX Capital Pty Ltd an Australian financial services company, explained that the fall in gold may make sense against the stronger USD.
Key Quotes:
“However, it is odd to see it underperform other G10 currencies in an environment of higher global market volatility and increasing inflation pressure in the US. “
“The steep fall in CNY may reflect a new policy era under a new central bank governor, allowing currency flexibility to act as a shock absorber for the economy. It hasn’t led to capital flight from China, and this may be helping limit contagion to global markets. “
“However, weak Chinese currency and equities are spreading more clearly to Asian markets. The threat of tariffs has not significantly dampened activity indicators in Asia or globally. “
“US surveys are still reporting rude health. Inflation risks are rising in the US and are likely to keep the Fed raising rates at a steady pace. The USD may remain relatively strong against most other currencies while it continues to raise rates. Negative feedback from global market volatility and tariffs to US markets and economic confidence may not be sufficient yet to halt the USD’s advance.”
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