- Trump isn’t happy about the interest rate in the US
- Fed may be controlled by the US goverment
- Gold moved higher on the back of weaker dollar
US futures are trading mostly higher and investors ready to build on the gains. The reason behind that is the optimism around the US and China trade deal. However, before we get into that, it is important to talk about the key issue which many traders are paying close attention to. The Fed has increased interest rate a few times this year already and this has fuelled the dollar rally. The president of the United States isn’t too happy about it, he has said that he will continue to show his discomfort as long as the Fed will continue to increase the interest rate. This means that investors are going to remain more on the edge because Trump’s discomfort mean that anything can happen.
His track record shows that he will do anything to get things done his way and that could possibly mean changing the chairman of the Fed. Yes, for now, this looks very stretched idea and doesn’t seem like that this will happen because Mr Trump was the one who appointed the Fed chairman. A change at this level would mean change in the Fed monetary policy and this is something which the market isn’t prepared for at all.
Back on Wall street, risk appetite is back with vengeance and investors pushed the stock market to a new record. Investors over in Asia would likely to build on this momentum. Investors are confident that trade war, an issue which has jolted the markets several time, will not derail the rally.
Trump’s comment on the fed policy has done a big favour for the gold bulls. Traders are uncertain about the dollar rally and this has restored the gold rally- for now. Central banks are suppose to be free and should be allowed to tackle the handle policy according to the economic data. Turkey’s currency was battered because there were serious concerns that the central bank will not have any independence. And now, over in America, we have Trump who is unleased with the higher interest rate. But overall, we still think that there is nothing to be really excited about the gold move because the upward move is still not powerful. Having said if we close and remain above the 1200, then we have assurance that the current pull back in the price is over.
