We’ve experienced a fluctuating trend on many different currency pairs, commodities and stocks on the global forex market. During the year, there are some global developments which affected to the global markets in different countries all around the world. Especially, Brexit referendum in United Kingdom, Presidential Elections in the USA, OPEC meeting about production limitations in producer countries, Referendum in Italy and the possibilities of interest increase by Fed have been pricing by the global markets from the beginning of 2016.
Actual Movements in Precious Metals
We’ve observed a mobile trend on precious metals. Of course, gold is the most popular metal of the world which is known as the “safe harbor” for the investors. Because investors do not offer any return alternative to the gold investor except for the price differences that occur only in the market, investors may turn to instruments other than gold because their stocks have a dividend yield or offer interest income like a fixed income security. However, we can say that year 2016 is the year of low interest environment on global basis. For this reason, when we exclude the last quarter of 2016 from the assessment, another reason for the rise in gold prices in 2016 is that gold was fed from the low interest environment on a global basis. An increase in gold demand was seen in parallel with the perception that the holding cost of gold was lower in 2016, when the low interest environment prevailed throughout Europe, especially in Europe.
Gold prices, which have the right proportion with the liquidity abundance in the global markets, may change according to the liquidity conditions around the world. Gold prices have started to decline due to the news that the Fed will end its bond purchase program since early 2013, and this weak trend has continued in 2014 with the impact of the Fed's liquidity reduction in the financial markets. It is seen that there is a positive correlation between the gold price and the central bank's balance sheet sizes and thus the amount of liquidity they have given to the market. In summary, during times of liquidity growth in global markets, it has become easier for investors to turn to emerging countries and alternative investment areas such as gold.
The depreciation following the US presidential election is expected to add speed to inflation over import prices over the coming months, but the extent and speed of the pass-through between exchange rates and inflation are controversial. It is doubtful that the pressure on energy and food prices and discounts on inflation will be compensated by the rise in rates. Finally, with the first days after surprising US elections result, the Asian markets effected very negative from Trump’s statements. But, towards to the end of 2016, we could observe a lot of different recovery signals on different currencies which are traded in Asian markets.
- Date: 19 December 2016 Mon 18:39
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