Rising geopolitical concerns will help gold gain more

2020 ◽  
Keyword(s):  
Interest Rates ◽  
Precious Metals ◽  
Organised Crime ◽  
Gold Price ◽  
Price Ratio ◽  
Content Type ◽  
Gold Market ◽  
Reserve Bank ◽  
The Us ◽  
Copper Gold

Subject Gold market dynamics. Significance The gold price rose above 1,570 dollars per troy ounce this week for the first time since April 2013. This follows a near-20% gain last year, the largest in a decade. Moreover, this came as the dollar largely flatlined last year, and the unusual extent to which the gold price outpaced the dollar led it to a record price in many local currencies. Interest rates fell worldwide in 2019 and long positions in gold, which benefit when it increases in value, tripled compared to the 2014-18 average. Impacts Stoking interest in the market, the Reserve Bank of India is offering senior gold bonds yielding 2.5%, and discounts for online buyers. A headwind is US prosecutors' labelling JP Morgan’s precious metals desk a 'criminal enterprise', a term often linked to organised crime. The cryptocurrency market is seeing the issuance of gold-backed tokens surge; Tether Gold is 100% backed by bullion reserves. Gold is benefiting from the growth in wireless applications for 5G infrastructure, offsetting demand losses from other tech applications. The copper-gold price ratio will rise if US-China trade conflict eases before the US election, but US rate cuts could curb copper’s gain.

Adoption of yield-curve control could aid US recovery

2020 ◽  
Keyword(s):  
Interest Rates ◽  
Yield Curve ◽  
Balance Sheet ◽  
Quantitative Easing ◽  
Government Bonds ◽  
Content Type ◽  
Forward Guidance ◽  
Reserve Bank ◽  
The Us

Subject Yield-curve control. Significance The US Federal Reserve (Fed) is contemplating yield-curve control (YCC), a policy pursued by the Bank of Japan (BoJ) and Reserve Bank of Australia (RBA) alongside quantitative easing (QE) and forward guidance. A central bank does this by capping the yields on government bonds of a chosen maturity through unlimited bond purchases. This supports the economy by reducing borrowing costs for financial institutions, households and businesses. Impacts By providing transparency over a central bank’s actions, YCC would be likely to reduce the volatility of long-term interest rates. YCC adds to the Fed balance sheet; the Fed will need a credible exit strategy to cut market volatility and the risk of Fed capital losses. A sharp uptick in inflation may put upward pressure on long-term yields, necessitating higher Fed purchases to maintain its targeted peg.

Strong dollar will threaten global gold market

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Federal Reserve ◽  
Gold Price ◽  
Direct Access ◽  
Quantitative Easing ◽  
Price Setting ◽  
Foreign Investors ◽  
Content Type ◽  
Gold Market ◽  
Market Outlook

Subject Gold market outlook. Significance The gold price is up only 0.9% since the year started, despite Greece's negotiations with its creditors and resulting stronger demand for safe haven assets, as the dollar's strength and buoyant equity markets weigh on investor appetite for gold. For several years, gold benefited from expectations of negative real interest rates, but the end of the Federal Reserve (Fed)'s quantitative easing programme has eliminated the main macroeconomic argument for investors with dollar-denominated wealth. While there is evidence of the physical metal migrating to Asia, the process has been accompanied by an even stronger demand for dollar assets, undermining any gold price gains. Impacts The London Bullion Market Association has selected ICE benchmark to administer price-setting, which will be based on electronic auctions. China will provide foreign investors with direct access to its gold market. Holders of distressed mining assets will fall prey to companies with easier access to financing, reducing the industry's fragmentation.

Waning investment appeal will check the gold price

2021 ◽  
Keyword(s):  
Gold Price ◽  
Content Type ◽  
Reserve Bank ◽  
Near Term

Significance Having lost nearly 11% in January-March 2021, gold recouped some of its losses in April-June, but recent months have seen unseasonal weakness. Impacts Gold investment lacks popularity: two weeks after announcing its relisting, Russian miner Nordgold cut its plan to list in London. India has cut import duties on gold and silver to 7.5% from 12.5% and this will provide a boost to physical markets. The Reserve Bank of Zimbabwe will allow miners to export a portion of their gold; this will give them funds with which to boost output. Nevada is raising taxes on gold and silver mines to fund education under a law signed in 2021; the near-term impact of this will be limited.

Strategies for Business Firms in Declining Markets

2009 ◽  
Vol 5 (2) ◽  
pp. 173-181
Author(s):  
Sarira Aurangabadkar
Keyword(s):  
Interest Rates ◽  
Developed Countries ◽  
Fiscal Year ◽  
Government Growth ◽  
Global Recession ◽  
Reserve Bank ◽  
The Us ◽  
Manufacturing Activity ◽  
The Government ◽  
The Uk

The economic crisis that has engulfed the world since 2007 has become serious by the first quarter of 2009.Many developed countries too are affected severely, namely the US, Germany, the UK and others. Fortunately, India as of now seems to be less affected, yet the winds of global recession are now felt. The Indian economy grew at an annual rate of 7.6% in the quarter ending in September, 2008. As per the projections of the government growth in the fiscal year, 2008-09 could be in the range of 7 to 8 %, which is, lower than 9% in the last year. The government has unveiled a multibillion dollar stimulus on 7th December, 2008 and 2nd January, 2009 respectively. The Reserve Bank of India has cut interest rates aggressively. India Inc has felt the heat of the global meltdown in the third quarter ending in December, 2008 where the income has dropped by a massive 23% points compared to the previous year. Indian manufacturing activity has contracted for the second consecutive month in December, 2008 to its lowest in more than three and half years. India’s exports too have declined by 12.1 % in October, 2008 showing a negative trend for the first time in the last five years.

Political pressure on Turkey's Central Bank will go on

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Sharp Decline ◽  
Content Type ◽  
Balance Sheets ◽  
The Past ◽  
Consumer Prices ◽  
Highly Sensitive ◽  
The Us ◽  
External Sources ◽  
Run Up

Significance The CBRT is expected to respond at its regular monthly interest rate-setting meeting to the fall in inflation in January to 7.2%. However, while the nearly 50% slide in oil prices since last June has led to a sharp decline in headline consumer prices, core inflation has been hovering near 9% for the last four months -- significantly above the CBRT's 5% inflation target. Just as importantly, Turkey's currency has fallen to a record low against the dollar, losing 7% over the past month because of the increasing politicisation of Turkish monetary policy and mounting expectations that the US Federal Reserve (Fed) will begin hiking interest rates as early as June, putting Turkish assets under renewed strain. Impacts CBRT independence is becoming one of the main focal points for market concern about emerging markets. Heavy reliance on external sources of finance will leave Turkey highly sensitive to resurgent dollar and increased US Treasury yields. Renewed lira weakness is likely to persist in the run-up to elections in June, which could also coincide with rising US interest rates. That would put further pressure on the balance sheets of Turkey's heavily indebted corporate sector.

US energy high-yield bonds spur default risk

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
Oil Price ◽  
High Yield ◽  
Content Type ◽  
The Past ◽  
The Us ◽  
Low Interest Rates ◽  
Investment Grade ◽  
Energy Companies

Subject Impact of the oil price drop on energy high-yield bonds. Significance The over 50% oil price drop since June 2014 is hitting bonds issued by energy companies, particularly those issued by sub-investment grade corporates. The US high-yield bond market has been growing rapidly over the past five years. The shale boom has generated considerable investment, mainly funded through the issuance of these bonds which benefit from historically low interest rates. As the oil price has plunged, the spread over Treasury yields paid by the average issuer in the energy subsector has more than doubled between July and the December 2014 peak. Impacts Yields currently offered by the energy subsector are not far from pricing in a default scenario. Persistently low oil prices will further darken the outlook for the energy subsector and the high-yield market generally. A possible default cycle in the energy sector could accelerate outflows, overstretching the sector further.

Central bank action will drive global equity markets

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Equity Markets ◽  
Economic Data ◽  
Equity Prices ◽  
Monetary Policies ◽  
Content Type ◽  
Market Sentiment ◽  
The Us ◽  
Us Monetary Policy

Significance This volatility is driven by expectations of further monetary stimulus in response to a slowing economy. Despite persistent concerns about the fallout from the anticipated tightening in US monetary policy and many country-specific risks, such as the standoff between Greece and its creditors, equity market sentiment remains supported by accommodative monetary policies worldwide and expectations of the US monetary policy tightening being gradual. Impacts Market volatility could increase further, as better-than-expected economic data in the euro-area vies with weaker-than-anticipated US data. Decoupling of surging equity prices and weak economic fundamentals threatens the rally's sustainability, increasing scope for volatility. This decoupling is most pronounced in China, where weak economic data prompt buying of equities in anticipation of stimulus measures. The greatest risk in equity markets is uncertainty surrounding US interest rates and their impact on emerging markets.

Prospects for the global economy in the fourth quarter

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Global Economy ◽  
Fourth Quarter ◽  
Content Type ◽  
Bank Of China ◽  
Policy Interventions ◽  
The Us ◽  
Global Demand ◽  
Global Growth ◽  
China’S Economy

Subject Prospects for the global economy in the fourth quarter. Significance Three threats are on the horizon. Firstly, the US Federal Reserve (Fed) might raise interest rates this year. This move, though well signalled, may have negative repercussions, especially in emerging markets (EMs). Secondly, China's economy, a key to global growth, is slowing and its financial markets are exceptionally volatile. These factors have already elicited policy interventions such as renminbi depreciation and further rate cuts by the People's Bank of China (PBoC). Finally, there is no apparent end in sight to weak global demand and the fall in commodities prices that has left commodity-exporting countries struggling with precipitous drops in revenue.

Low rates facilitate private equity's global spread

2016 ◽  
Keyword(s):  
Interest Rates ◽  
Private Equity ◽  
Petroleum Industry ◽  
Capital Requirements ◽  
Content Type ◽  
Net Returns ◽  
The Us ◽  
Global Spread ◽  
Us Presidential Election ◽  
The 2008 Financial Crisis

Subject Private equity trends. Significance With global interest rates close to record lows, new private equity (PE) firms are opening at record rates, raising the most money since the 2008 financial crisis. However, with banks facing stricter supervision and higher capital requirements, PE firms are less able to use leverage to increase their returns. Impacts More PE funds will mean heightened competition and higher prices for new investments. The surge in PE investment may mean the top of the cycle is near. The upcoming US presidential election could affect carried interest taxation, decreasing the net returns to PE GPs. Increased PE investment in the US petroleum industry should prevent a significant dip in US oil production.

US Fed will struggle to raise rates much in 2016

2016 ◽  
Keyword(s):  
Interest Rates ◽  
Investor Sentiment ◽  
Commodity Prices ◽  
Federal Funds ◽  
Federal Funds Rate ◽  
Content Type ◽  
The Us ◽  
The Face ◽  
Lift Off ◽  
China’S Economy

Subject US monetary policy outlook for 2016 and its global impact. Significance There is a large discrepancy between the US Federal Reserve (Fed)'s estimates for interest rates at end-2016 and the expectations of bond investors. The latter are anticipating less tightening than the 100-basis-point (bp) rise in the Federal Funds rate the Fed has pencilled in for this year. Despite a successful rates 'lift-off' on December 16, the Fed faces many challenges in raising rates in the face of mounting stress in credit markets, disinflationary pressures from the plunge in commodity prices and a contraction manufacturing. Impacts While the Fed will tighten policy, other central banks, including the ECB, will provide further stimulus, accentuating policy divergence. Investors will price in a more hawkish Fed if US inflation accelerates faster than expected, potentially leading to a sell-off. Concerns about China's economy and the commodity prices slump will also shape investor sentiment.

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