2016-10-14 13:58:27

The USD has been strengthening in the currency market due to the increasing changes of the rate hike in the USA in December. Today, the USD is rising against the Yen and the Euro.

At the end of the Asian session the index, WSJ, which shows the position of the USD against a basket of 16 major currencies has grown by 0.3%, up to 88.35.

Gold is supported by the minutes the Fed meeting in September which shows uncertainty about the timing of the rate hike.

At the last debate the result of the Republican candidate Donald Trump was better than the result of the democratic candidate, Hillary Clinton.

If Donald Trump becomes President, the demand for safe-haven assets will increase, as some economists believe that his actions are too difficult to predict.

It is expected that Mrs Clinton will continue soft monetary policy, which will have a positively effect on the American stock market, and will encourage investors to buy risky assets. In this case, the price of gold and other precious metals will go down.

It is worth mentioning that the “Pure Gold Company” informed about the increase in weekly physical demand for gold by 24%, due to concerns about slowdown in Chinese economy.

The price of gold fell sharply last week after the publication of the strong US macro-economic data and tough comments by the US Fed, which increased probability of the rate hike in December.

Due to the high chances of the interest rate hike in the USA, gold is losing its investment attractiveness, giving way to the USD and safer assets, such as government bonds.

The rise in the USD makes gold less attractive as the price of gold is denominated in US currency and the borrowing costs for acquisition and storage of gold are growing.

Today at 20:30 (GMT+3) a speech by the head of the US Fed Janet Yellen will begin, which may increase market volatility. If Janet Yellen will indicate possibility of the interest rate before the end of this year, the USD will sharply go up.

Traders shall be very careful during this time period as volatility may sharply increase.

Note also that today is Friday, the last trading day of the week.XAU/USD: the price of gold has dropped last week.  Fundamental analysis for 14/10/2016