Gold Prices in UAE Decline As Dollar Holds Firm

Commodity

Economic

Summary:

Over the past two weeks, gold had experienced a significant decline from its recent record highs. Globally, spot gold stabilized at $2,179.98 per ounce. China’s gloomy outlook continues to push copper prices downward.

Gold prices remained on Wednesday within a narrow range as the dollar’s strength hindered an overnight rebound, pending further indications regarding inflation and interest rates. The price of gold had experienced a significant decline from its recent record highs over the past two weeks due to dovish signals from other major central banks, which led traders to favor the dollar. The dollar index slightly increased in Asian trade and approached a one-month high.

On Wednesday, 27 March, the gold prices in the UAE saw a decline, erasing some of the gains made on the previous day. The price of the 24K variant of gold dropped by AED1 per gram, falling to AED263.75 from Tuesday’s closing price of AED264.75. On Tuesday, the yellow metal had gained AED1.75 per gram.

As for the other variants, the 22K opened at a lower price of AED244.25 per gram, the 21K at AED236.5 per gram, and the 18K at AED202.75 per gram.

Globally, at 00:25 ET (04:25 GMT), spot gold stabilized at $2,179.98 per ounce, while gold futures expiring in April saw a slight increase to $2,178.60 per ounce. Although gold prices made some gains in overnight trading, persistent dollar strength dampened any further upward momentum. Traders continued to favor the dollar based on dovish signals from the Swiss National Bank and the Bank of England, which positioned the greenback as the only high-yielding, low-risk currency.

Key data and Fed comments drive dollar flows

The anticipation of key data, such as the PCE price index, which is the U.S. Federal Reserve’s preferred measure of inflation, and comments from top Fed officials later in the week, prompted flows into the dollar. Traders were particularly interested in obtaining more signals regarding potential interest rate cuts in the United States. However, it is still expected that the Fed will only begin reducing rates starting in June, resulting in limited upside for gold in the meantime. Nevertheless, gold is anticipated to benefit from lower interest rates towards the end of the year.

In terms of other precious metals, platinum futures increased by 0.1 percent to $918.50 per ounce, while silver futures fell by 0.2 percent to $24.573 per ounce.

China’s gloomy outlook continues to push copper prices downward

As for industrial metals, copper prices extended their decline from 11-month highs on Wednesday due to prevailing weak sentiment towards China, the top importer of copper. Three-month copper futures on the London Metal Exchange fell by 0.4 percent to $8,836.00 per ton, while one-month U.S. copper futures fell by 0.3 percent to $3.9932 per pound.

Data released on Wednesday indicated a 10.2 percent increase in Chinese industrial profits during the first two months of 2024. However, a significant portion of this growth was attributed to a lower base for comparison from the previous year. Optimism regarding Chinese demand also diminished in recent sessions as inventory data revealed that Chinese copper stockpiles remained robust in 2024. This offset hopes of a potential copper supply shock following announcements from several major Chinese refiners about their plans to reduce production.

Source: Economy Middle East

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Warren Takunda

Cryptocurrency

Bitcoin prices have returned to resistance above $70,000 as an uptick in profit-taking has prevented the asset from moving higher.

BTC hit $71,375 on March 26, returning close to its all-time high of $73,738 earlier this month, but it failed to break through to a new peak.

This was largely due to profit-taking, which has accelerated, according to on-chain analytics provider Glassnode.

“Several on-chain indicators have flagged an uptick in profit-taking events,” the firm noted in its weekly update. With more than $2.6 billion in realized profit taken, the market has reached resistance, it added.

Profit-Taking Typical Behavior

On March 26, Glassnode observed that Bitcoin’s 16% correction was almost identical to the pre-halving pullback in the previous cycle.

It added that the majority of the 2 million BTC that switched from a status of being ‘in-profit’ to being ‘in-loss’ during the retrace now have a cost basis above $61.2K and have recently changed hands.

As the market reached its peak level, more than $2.6 billion in realized profit was locked in via on-chain spending, Glassnode reported.

Moreover, around 40% of this profit-taking was attributed to long-term holders, “which includes investors divesting from the GBTC Trust.”

Grayscale’s GBTC has shed 277,393 BTC since it was converted to a spot ETF in mid-January, with another $212 million in outflows measured on March 26. However, the newly launched nine ETFs have swallowed up that outflow and more.

The remaining $1.56 billion in realized profit was locked in by short-term holders, it added. Traders were taking advantage of the inflowing liquidity and market momentum, mirroring previous cycle peaks.

“Realized profit by both cohorts has reached a similar magnitude to during the 2021 bull market peak.”

Glassnode concluded that profit-taking was “not atypical market behavior” and aligns very closely with market patterns observed during all prior cycle all-time high breakouts.

Elsewhere on Crypto Markets

BTC was trading flat on the day at around $70,000 at the time of writing as markets took a breather. At current levels, it is just 4.6% down from its March 14 peak price.

Total capitalization was $2.79 trillion, just 9.4% away from its peak of $3.08 trillion in November 2021.

Most of the altcoins were also flat during the Wednesday morning Asian trading session. However, BNB, XRP, AVAX, and TON were retreating slightly as DOGE, SHIB, and ICP saw marginal gains.

Source: Cryptopotato

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Kevin Du

Cryptocurrency

Stocks

The London Stock Exchange will debut Bitcoin and Ether exchange-traded notes in two months, an announcement that has sparked price rallies for the two largest cryptocurrencies.

LSE announced this week that it will launch support for the ETNs on May 28, subject to approval from the Financial Conduct Authority. The announcement was a detailed follow-up to its statement on March 11 expressing interest in the products. This was the same day the FCA gave its green light for such products after pressure piled up following the approval of spot ETFs for BTC in the US market, as Crypto News Flash reported.

LSE will start accepting applications on April 8. However, it has allowed enough time before the official launch to ensure that any interested issuer files the application. The seven weeks between April 8 and May 28 will give the issuers enough time to prepare the required documentation and gain the approval of the FCA.

While the issuers have seven weeks to get their house in order, they must submit by April 15 a letter outlining how they plan to meet all the requirements on the crypto ETN factsheet. They must also submit a draft of the base prospectus showing where such requirements are included in its actual base prospectus.

To list their ETNs on the first day of trading, issuers must receive approval of their base prospectus from the FCA by midday on Wednesday, May 22.

Only professional investors will be eligible to trade the crypto ETNs, in line with the UK’s laws, which bar retail traders from derivatives and other sophisticated products. This extends to crypto derivatives, which the FCA banned in January 2020. It claimed they were “ill-suited” for retail investors. Although some stakeholders argued this would push traders into exchanges like Deribit and BitMEX, which are not as strictly regulated as they are offshore, the government has been unrelenting.

LSE ETNs Push Bitcoin and Ether Prices

While the LSE’s announcement wasn’t entirely new, it gave a much-needed boost to BTC and ETH prices after a loss of momentum following their historic marches to new highs two weeks ago.

Bitcoin changes hands at $70,283, shooting up from $65,000 just before the LSE’s announcement. Since surging above $70,000 on Monday, BTC has traded above this critical threshold, with a slight and quickly-corrected dip on Tuesday.

Bitcoin and Ether ETNs to Debut on London Stock Exchange in May – Triggers BTC and ETH Price Rally_1

As Crypto News Flash reported, analysts believe the pullback from the new all-time highs reached just two weeks ago could be the dreaded pre-halving dip that almost always occurs. With that behind it, BTC could be on the up through to the halving and beyond.

Ether, on the other hand, is trading at $3,600, and while it has been trading sideways in the past day, the LSE ETN announcement injected new life earlier this week. ETH gained from $3,340 to a weekly high of $3,675 on Tuesday.

Source：Crypto News Flash

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Cohen

Stocks

As so often with markets, it may be time to get a bit anxious when all around see nothing but blue skies.

Trot out almost any macro market metric you care to think of these days and there appears to be a positive twist - at least for record high stock markets that have clocked up more than 10% gains for a first quarter that was marked at the outset by much investor angst and trepidation.

U.S. stocks are expensive but not at extremes, it's argued, and earnings forecasts for next year are rising smartly to near 14%. U.S. economic growth is slowing a bit but recession this year now seems far-fetched.

Still-high interest rates are set to start falling over the summer as somewhat sticky inflation subsides again. And implied volatility gauges in stock, bond and currency markets are unusually subdued.

The picture outside the United States may be patchier, but stocks in Europe or Japan are cheaper too and the economic growth nadir in both areas may already have passed. European rates may even start falling before U.S. equivalents.

What's more, the big bugbear of the past 18 months for many - stock index gains that had been overly concentrated in a handful of Big Tech and AI-infused winners - is starting to resolve and gains are clearly broadened out as recession fears fade and rate cuts near.

From the trough of last October's bond-related shakeout, the benchmark S&P500 has gained 25% in just 5 months.

But the equal-weighted version of the index - which corrects for the outsized performance of leading megacaps - has jumped 23% in that time, Russell 2000 small caps have rebounded 26% and Japanese and euro zone blue chips are up 28% and 25% respectively in dollar terms.

Reflected in those stellar gains, the hand-wringing of the early part of the new year seems to have stopped completely.

The most recent Bank of America global fund manager survey has stock allocations at two-year highs and the highest 'risk appetite' gauges since November 2021. Prior to November there had been a net underweight position in equity for 18 months straight - the longest gloomy streak since crash of 2008/09.

Have all the doubters turned to believers?

And have the bears finally capitulated after 18 months of bruising underperformance?

If they have, it unnerves some asset managers who have been happy to swim against the early-year pessimism - even those who mostly agree with the bullish thesis.

Swiss asset manager Julius Baer's chief investment officer Yves Bonzon said he is starting to wobble on his still-overweight equities position - fearing a combination of herding consensus, a seasonal lull in equity demand over the summer and the upcoming U.S. election uncertainty.

"We've been tempted for the best part of four weeks to reduce at the margin equity risk and hedge," he said. "We refrained from doing do so so far, but if you were to force me to add or reduce equities I'd be tempted to slightly reduce."

"There's going to be a consolidation phase between now and November in the markets - a 10-15% correction could happen at any time and would, I'd argue, be healthy," he added.

"Shocks are by definition impossible to foresee (but) markets are probably more vulnerable than we have been to an external shock than at any point since COVID hit in 2020." Nagging Thoughts of a Stock Market Correction_1

Nagging Thoughts of a Stock Market Correction_1

Nagging Thoughts of a Stock Market Correction_2

Nagging Thoughts of a Stock Market Correction_3

Back To The Future

Curiously, a 10% correction of the S&P500 from current levels would only leave it roughly back at where end-2024 consensus forecasts were as recently as November, according to Reuters global equity polls.

That end-2024 median forecast has been revised up sharply in last month's polls to 5,100 and to 5,300 for the end of 2025.

But we're already there for the most part.

What to do - keep riding the wave or hedge bets a bit?

With implied 30-day equity volatility captured by Wall St's VIX index just 3 points from record lows, there may be some temptation to hedge equity portfolios with options.

But many asset managers have used punchy short-term cash interest rates of more than 5% as effective hedge instead.

And many are now both overweight equities and cash simultaneously.

According to data from the Investment Company Institute, U.S. money market fund assets topped $6 trillion this month for the first time ever - almost a $1 trillion more than they were a year ago and almost twice pre-pandemic levels.

And that's one key reasons why investors are reluctant to turn tail on equities short of some dramatic about turn on the benign macro economic picture.

The assumption is that cash stash is there until the Fed finally starts to cut short-term interest rates - and futures have that penciled in for June. Then it starts to stream out to either bonds or equity.

If the Fed were to hesitate in easing in the second quarter, then it could be a bumpy summer.

U.S. election uncertainty then hoves into view to complicate any bounceback - even if you believe the bullish economic backdrop holds true through 2025 regardless of the result.

AXA Investment Managers' Chris Iggo points out the average return of the S&P 500 in U.S. Presidential election years has been around 11%. And that's what it's done already in 2024.

But "if we are now in a benign growth cycle – then financial market returns could be more like their long-term averages," he wrote. "That means slightly higher for bonds than in recent years and slightly less for equities than over the last year. But good overall."

Bullish and bearish at the same time perhaps. Nagging Thoughts of a Stock Market Correction_4

Nagging Thoughts of a Stock Market Correction_5

Nagging Thoughts of a Stock Market Correction_6

Nagging Thoughts of a Stock Market Correction_7

Source: Reuters

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Ukadike Micheal

Economic

Stocks

In early Wednesday trading, European stocks exhibited resilience, maintaining stability as investors eagerly anticipated crucial consumer and economic confidence data for the region. The region-wide Stoxx Europe 600 index showed a modest uptick of 0.1%, indicating a cautious yet optimistic sentiment among market participants. Similarly, France's Cac 40 remained relatively flat, Germany's Dax edged up by 0.1%, while London's FTSE 100 experienced a slight decline of 0.1%.

As anticipation mounted, contracts tracking Wall Street's S&P 500 and the Nasdaq Composite hinted at a 0.3% increase ahead of the New York trading session. The growing anticipation stems from the forthcoming release of data on EU consumer confidence and economic sentiment later in the morning, which are expected to provide valuable insights into the economic health of the region.

Examining index performances for the day and year-to-date (YTD) reveals a mixed sentiment prevailing across European markets. The Stoxx Europe 600 displayed a daily change of 0.1% and a YTD change of 6.8%, indicating a gradual uptrend in the broader European market. Similarly, France's Cac 40 exhibited a daily change of 0.0% but boasted a strong YTD change of 8.5%, reflecting robust performance over the longer term. Germany's Dax, with a daily change of 0.1% and an impressive YTD change of 9.8%, showcased resilience and investor confidence in the German economy. Conversely, London's FTSE 100, despite a minor daily decline of -0.1%, maintained a respectable YTD change of 2.5%, indicating relative stability amid ongoing uncertainties.

From a technical standpoint, the stability observed in European stocks amid anticipation of key economic data signifies a cautious approach by investors. Economic indicators such as consumer confidence and economic sentiment play a pivotal role in shaping market expectations and influencing investment decisions. Positive data releases could bolster investor confidence, potentially leading to further gains in equity markets. Conversely, disappointing figures may trigger increased volatility and downside risks, prompting investors to reassess their positions.

The modest gains in Wall Street futures suggest a prevailing positive sentiment in global markets, with investors eyeing potential growth opportunities. However, uncertainties surrounding economic recovery, geopolitical tensions, and central bank policies continue to exert influence on market sentiment, necessitating a prudent and adaptive investment strategy.

The stability observed in European stocks ahead of the release of consumer and economic confidence data underscores the significance of these indicators in guiding market sentiment and investment decisions. As investors eagerly await the outcome of these reports, vigilance and adaptability remain essential in navigating the dynamic landscape of global financial markets. Whether the data release fuels optimism or caution, staying informed and responsive to market developments is crucial for capitalizing on opportunities and effectively managing risks in an ever-evolving investment environment.

Source: Financial Times

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FOREX.com

Economic

Forex

USD/JPY has risen to its highest level since 1990 amid USD strength and low trading volumes in the lead-up to the Good Friday holiday.

The yen’s depreciation to 151.97 came following comments from BoJ board member Naoki Tamura, who suggested that the central bank was in no rush to hike rates further and would remain largely dovish after last week’s rate hike, the first in 17 years. Finance Minister Shunichi Suzuki strongly warned that Japanese authorities could intervene to support the yen, although this has had little impact as the yen remains on the back foot.

The USD is rising against its major peers towards a monthly high as investors wait for fresh clues on the Federal Reserve's monetary policy outlook. The USD is finding support after dovish signals from other major central banks and ahead of Friday’s inflation data.

Yesterday's data showed a larger-than-expected rise in durable goods orders, pointing to signs of a recovery in US manufacturing, while consumer confidence held steady.

USD/JPY forecast – technical analysis

USD/JPY has risen above the 2023 high of 151.90 to a peak of 151.97, approaching the 152.00 line in the sand. A rise above here could pave the way for a move towards 153.80, the rising trendline resistance, although the risk of intervention is high.

Support can be seen at 150.90, the January high. A break below here brings 150.00, the psychological level, into focus.

USD/JPY, FTSE Forecast: Two Trades to Watch_1

FTSE falls despite Chinese industrial profits rising

China's industrial profits rise by 10.2%.

Hawkish BoE comments limit gains.

FTSE hovers below 7969.

The FTSE is falling after rising to a 13-month high in the previous session. Falling oil prices and data from China are pressuring the index.

Chinese industrial profits rose by 10.2%, hitting a 25-month high amid signs of the slowdown bottoming out. The return to growth of Chinese industrial profits is an encouraging sign, although it's worth highlighting that the figures are being boosted by a low base of comparison from a year earlier. As a result, the market appears less than impressed by the double-digit growth, with miners falling lower.

Metal prices across the board are falling, following the data, amid a stronger USD. The USD is rising back up towards a monthly high, hurting dollar-denominated commodities.

Energy stocks are also dragging on the index. Oil majors are tracking oil prices lower after US inventories unexpectedly increased in the previous week, raising concerns over the demand outlook and pulling oil prices 1% lower.

There is no major UK economic data due to be released today, and the economic calendar is broadly quiet in the US as well. Attention will be on the US core PC data at the end of the week, which could provide further clues about the Federal Reserve's path for monetary policy.

FTSE forecast – technical analysis

The FTSE has held its break out from 7785 and is consolidating around last week’s 10-month high. Last week's high of 7969 remains the level buyers need to beat to bring 8000 and 8045, the all-time high.

Minor support is at 7890, the weekly low. Below here, there is little in the way of support until 7800 and 7786, the January high.

USD/JPY, FTSE Forecast: Two Trades to Watch_2

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Warren Takunda

Central Bank

Economic

The Australian Dollar was sold following softer-than-expected monthly inflation figures, but weakness was shortlived as analysts looked under the hood and saw some concerning trends.

Australia's CPI inflation indicator remained anchored at 3.4% year-on-year for the third month in a row in February, which some economists say indicates that price pressures are moderating.

The Australian Dollar fell after the data release as the market was looking for a stronger 3.5% outcome. However, the details in the report indicated that weakness soon faded.

The Pound to Australian Dollar exchange rate rose to 1.9368 following the release before paring the advance to 1.9337. The Australian Dollar to U.S. Dollar exchange rate fell to 0.6511 before paring the fall and recovering to 0.6531.

"AUD/USD fell by around 30pips following the release of the weaker than expected Australian CPI indicator for February," says Kristina Clifton, an analyst at Commonwealth Bank of Australia. "However, most of the fall was subsequently unwound."

Stephen Wu, an economist at Commonwealth Bank, says inflation looks to be moderating faster than the RBA expects, noting downside risks to existing forecasts. "The softer inflation outcome today marries up with the slowing momentum in the economy and weak domestic demand growth."

Economists at ANZ say although the headlines are to be welcomed, there are signs of ongoing inflation persistence in some sectors of the basket.

"The RBA would take comfort in the current trajectory of inflation, with inflation on track to undershoot their Q1 forecast of around 0.8% q/q. But there are some signs that we may encounter the 'last mile' challenge," says Madeline Dunk, an economist at ANZ. Australian Dollar: Why the Knee-jerk Inflation Data Sell-off Was Quickly Faded_1

Australian Dollar: Why the Knee-jerk Inflation Data Sell-off Was Quickly Faded_1

'Sticky' inflation dynamics are still seen in the services and non-tradables components at 4.2% y/y and 4.8% y/y, respectively. This was up from 3.7% y/y and 4.7% y/y in January.

Goods (2.9% y/y) and tradeables (0.8% y/y) have been driving most of the recent disinflation.

The RBA said at its March update that it sees risks to inflation as being evenly balanced and wants to see services sector inflation fall before considering a rate cut. The market consensus is that the first cut will be delivered in September.

The monthly inflation indicator is a precursor to the main quarterly inflation release, which is what the RBA bases its policy decisions around.

Justin Smirk, Senior Economist at Westpac, says the mid-month of each quarter provides us with an important update on household services, and so February sets the tone for much of this group for the quarter.

"This presents an upside risk to our current quarterly CPI forecast," he says.

Signs of ongoing inflationary persistence in the non-tradeables and services could keep the RBA on edge and ensure it is the last of the major central banks to cut interest rates.

This would provide the Aussie with some tailwinds over the coming months.

If inflation falls at a faster pace than expected in the coming months, the start date for rate cuts could come forward, which would weigh on the Aussie Dollar.