Market Update – 21st June 2019 – Gold & Oil Surge As Markets Weigh Increasing Likelihood Of Volatility

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

Oil & Gold Surge:

AUD/USD made small gains overnight while the other crosses remain mostly unchanged. Gold and Oil prices though were the big movers with the price of Gold moving past A$2,000 an ounce for the first time ever while Oil surged closed to US$3 a barrel after Iran shot down a U.S Navy drone in the Persian Gulf. Tensions appear to be building and the market doesn’t like it.

Gold Rallying Not A Good Thing:

Additionally markets appear to be starting to price in some serious volatility & tough times ahead and a surging Gold price is a marked example of that. When Gold rallies, it’s usually not something to cheer about. Additionally in the U.S the Fed appears to be moving closer to a rate cut in a bid to boost the economy and growth. When the Fed cuts rates usually it means some sort of contraction/recession is around the corner, again another red flag for markets.

I’ll continue to monitor things and update accordingly, but prudent risk management at this point in the cycle is warranted. With the AUD, that means using forward contracts to hedge upcoming exposures.

AUD EXCHANGE RATES:

AUD/USD – 0.6890

AUD/GBP – 0.5414

AUD/EUR – 0.6100

AUD/NZD – 1.0479

AUD/JPY – 73.947

OTHER MARKETS:

All Ords (XAO) – 6,767

Gold – A$2,007/oz

Silver –  A$22.32/oz

WTI – US$57.30/barrel

DATA RELEASES TODAY:

EUR – French Flash Services PMI at 5.15pm

EUR – German Flash Manufacturing PMI at 5.30pm