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Reuters
2 days ago
- Business
- Reuters
MidEast war highlights key cross-asset trends to watch: Pelosky
NEW YORK, June 27 (Reuters) - The war between Israel and Iran offered a real-time look at some new global cross-asset dynamics that can help investors understand the state of play in the first half of 2025 and what they can expect in the next six months. Amid all the noise of the 12-day conflict, three points stood out. First, the U.S. dollar failed to mount any major advance during the roughly two weeks of the conflict, even though the DXY dollar index was sitting at a three-year low when Israel attacked Iranian nuclear facilities on June 13. Second, the U.S. Treasury market also failed to catch a bid amid the fighting, with the 10-year yield rising around 10 basis points right after the initial strikes. While yields have slipped since then, that appears to be related more to Federal Reserve dynamics than geopolitical drama. And finally, there was oil, where the story was mixed. Prices jumped around 15% after fighting broke out but then rapidly tumbled to pre-conflict levels once it appeared unlikely that there would be any significant supply disruption. So what does this episode tell us? The real-time signals in the dollar and Treasury market reinforce the growing consensus that the U.S. may no longer be the world's safe haven, the world's firefighter, if you will. Instead, in certain instances, America may now be the cause of the fire. This speaks to perhaps the most important market trend of the past six months: the underperformance of U.S. stocks relative to Europe and Asia. Investors appear to be warming to the potential for a secular change in global equity leadership away from the U.S. and toward the rest of the world. The MSCI ACWX index of non-U.S. equities is up more than 13% year-to-date versus a roughly 1% gain for the S&P 500. If this secular leadership shift occurs, it would be accompanied by more dollar weakness as a sustained period of capital repatriation out of the U.S. plays out. This, too, is already showing signs of manifesting with the U.S. dollar index down roughly 10% year-to-date. The upshot of these trends is a rare outcome, notes European investment bank Societe Generale. A broadly diversified portfolio including non-U.S. equity, corporate credit and commodities has outperformed U.S. equity in the year to date. That has only happened two times, on an annual basis, since 2009, according to SocGen. Given all this, what asset classes may be well positioned to outperform in the second half of the year and beyond? One contender could be a long unloved asset class: commodities. First, commodity prices are linked to global economic activity, and there are some bullish growth signals emerging despite the uncertainty about tariffs and geopolitics. For instance, the Citi Global Economic Surprise Index has recently picked up sharply, led by Europe. On top of this, there is the Trump administration's new 'run hot' approach to the U.S. economy. As Treasury Secretary Scott Bessent indicated in an X post, opens new tab on May 18, the administration's goal is to stabilize the debt burden by ensuring nominal GDP remains above interest rates. This reduces the risk of a near-term U.S. recession and, in turn, improves the global growth outlook. And as I've previously argued, we could be in the beginnings of a long global growth cycle underpinned by increased spending in Europe, Asia and North America, the three nodes of what I refer to as the TriPolar World. And that would be highly bullish for commodities. Next, if the U.S. dollar continues to weaken, this should provide a tailwind for commodity demand given that most of these contracts are priced in dollars. Continued dollar weakness, in turn, should allow emerging market central banks with policy space to cut interest rates and stimulate their economies without having to fear the negative exchange rate fallout. This should support both global growth and demand for commodities. In terms of performance, commodities have lagged relative to stocks over the past decade, with the S&P GSCI commodity index generating an annualized return under 3% over that period, opens new tab, compared to more than 11% for the S&P 500, opens new tab. Related to this, consider that the mining industry represented only around 1% of global stocks' market cap, a record-low, as of mid-May, according to an analysis by Crescat Capital. And, importantly, commodities have recently appeared to be on the verge of breaking out on a technical basis, with the S&P GSCI index briefly eclipsing 580 last week as the Middle East conflict was heating up. Of course, commodities could continue to lag if the Trump administration's chaotic economic policies weigh on global growth. But the president's actions since mid-April suggest that he has little stomach for upsetting markets or growth. It's also possible that the 'short dollar' trade, which has become crowded, could reverse. But considering how over-exposed many foreign investors were to U.S. assets coming into 2025, this trade may still have room to run. We obviously have no crystal ball to tell us whether Middle East tensions will rise again, providing more of a tailwind for energy commodities. But investors often wait for moments when fundamentals and technicals are aligned, and the cross-asset moves in recent weeks suggest that could now be the case for commodities. (The views expressed here are those of Jay Pelosky, the Founder and Global Strategist at TPW Advisory, a NYC-based investment advisory firm. You can follow Jay on Substack at The Tri Polar World, opens new tab). Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI, opens new tab, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab, opens new tab and X., opens new tab
Time of India
30-04-2025
- Business
- Time of India
Gold price forecast: Why did gold fall below $3,300 and what Trump's new China tariffs and upcoming US jobs data mean for gold's next big move
Gold price (XAU/USD) held near its session low on Wednesday, struggling to attract buyers as easing US-China trade tensions and stronger dollar demand weighed on the yellow metal. At the time of writing, gold was trading around $3,315, having dipped over 1% earlier in the European session. The precious metal is under pressure for a second straight day, driven by reduced safe-haven demand and firming expectations around key US economic reports. #Pahalgam Terrorist Attack PM Modi-led 'Super Cabinet' reviews J&K security arrangements Pakistan's General Asim Munir is itching for a fight. Are his soldiers willing? India planning to launch military strike against Pakistan within 24 to 36 hours, claims Pak minister Why is gold falling even as inflation worries linger? The drop in gold price comes at a time when market risk sentiment is improving. One of the biggest drivers of this shift is the easing of trade tensions between the US and several major trading partners. On Tuesday, President Donald Trump signed an executive order aimed at easing tariffs on foreign auto parts, granting carmakers a two-year window to raise domestic sourcing. This move, coupled with US Treasury Secretary Scott Bessent noting 'very good' offers from trade partners, has sparked optimism that major trade conflicts could be cooling down. That optimism has weakened demand for traditional safe-haven assets like gold. According to LKP Securities' Jateen Trivedi, expectations of a US-China trade deal and a possible peace framework between Russia and Ukraine have also played a role in dragging down gold prices. Meanwhile, the US Dollar (USD) has strengthened for the second consecutive day. The DXY Index, which measures the USD against a basket of major currencies, gained ground, especially against the Japanese Yen, rising 0.31%. This stronger dollar environment puts additional pressure on gold, which is priced in dollars and becomes more expensive for holders of other currencies. What's keeping gold above $3,260 despite the sell-off? While gold is struggling to stay above the $3,300 mark, strong technical support remains. The $3,265–$3,260 zone represents a key support area based on the 38.2% Fibonacci retracement of the recent rally from the mid-$2,900s. If the price breaks below this support, we could see a steeper drop towards $3,225 and possibly even $3,200, which marks the 50% retracement level. Live Events On the upside, bulls face resistance at $3,328, which aligns with the Asian session high. Above that, the next levels to watch are $3,348–$3,353, followed by a tougher supply zone near $3,366–$3,368. A move past these zones could bring gold back to $3,400, with more room to rise if momentum builds. Which US data could move gold prices this week? The next big test for gold comes with a series of high-impact US economic reports. Markets are closely watching: ADP private-sector employment data Q1 Advance GDP March PCE Price Index Friday's Nonfarm Payrolls According to economists, the US economy likely grew at an annualized pace of just 0.4% in Q1 2025, far slower than the 2.4% seen in the previous quarter. Meanwhile, the monthly Core PCE—the Fed's preferred inflation gauge—is expected to drop to 0.1% from 0.4%, while the headline figure is forecasted to fall to 0%, down from 0.3%. Disappointing figures could renew expectations that the Federal Reserve will soon resume cutting interest rates. Already, weaker data from the JOLTS report (job openings fell to 7.19 million from 7.48 million) and the sharp drop in Consumer Confidence to 86.0 in April — a five-year low — have fueled dovish Fed bets. If upcoming data misses forecasts, the USD may retreat, and gold could find fresh support. What could move gold prices next? Key US events to watch this week Wednesday : ADP Employment Change (private sector jobs) Q1 GDP (preliminary) – Forecast: +0.4% (down from Q4 2024's +2.4% ) PCE Inflation Data – Expected Core PCE: 0.1% (vs 0.4% prior); Headline: 0.0% (vs 0.3%) Friday : US Nonfarm Payrolls (April) – Forecast: +130,000 jobs , Unemployment Rate: 4.2% What do investors need to watch next in the gold market? With gold hovering between critical technical levels and the market flush with key data, volatility could spike soon. The Daily Pivot Point at $3,322 is the first level bulls need to reclaim. For a breakout to the upside, gold must push through $3,344 and then $3,370, a level currently acting as a ceiling. On the downside, $3,295 is the next cushion. A drop below $3,245—the high from April 11—could signal further weakness. While safe-haven demand is cooling for now, the gold market remains highly sensitive to geopolitical shifts and Trump's unpredictable trade policies. Gold-backed ETFs saw inflows of 227 tons in Q1 2025, the highest since 2022, according to the World Gold Council, helping the metal reach record highs earlier this month. But Indian jewelry demand is slowing, with Bloomberg forecasting an 11% drop in the fiscal year ending March 2026, which could weigh on physical demand moving forward. With uncertainty still looming, especially around Fed policy and global trade, gold's path will likely be shaped by data and political headlines in the days ahead. FAQs: Q: Why is the gold price below $3,300 right now? Gold fell due to stronger dollar, trade optimism, and easing safe-haven demand. Q: What can move XAU/USD prices this week? US GDP, PCE data, and Trump's tariff order can shake gold's direction.
Yahoo
12-04-2025
- Business
- Yahoo
Chart of the Week: Wall Street's 'Fear Gauge' Is Flashing Possible Bitcoin Bottom
It's been an exceptionally volatile week, but one measure may be signaling longer-term bullish sentiment for bitcoin. The sell-off in equities began on April 3, spurred by President Donald Trump's tariff-led uncertainties. Each day since then has been marked by sharp moves in both directions. The panic has hit both the equities and bond markets, while gold has surged to new all-time highs, and the DXY Index has broken below 100 for the first time since July 2023. In response, the S&P Volatility Index (VIX)—often called Wall Street's "fear gauge" —has surged to its highest level since last August and this is where things get interesting for bitcoin. The ratio of bitcoin to VIX has hit 1,903 currently, touching a long-term trendline that last time coincided with market volatility around the unwinding of the yen carry trade. At the time, bitcoin had reached a bottom of around $49,000. In fact, this is the fourth time this ratio has hit the trendline and then found the bottom. Previously, it touched the line in March 2020 during the peak COVID-19 crisis and initially in August 2015, both times followed by a rally in prices. If this trendline continues to serve as reliable support, it could suggest that bitcoin might have once again found a long-term bottom. Read more: Bitcoin's Recent Drawdown Proves Its More Than Just a Leveraged Tech Play
Yahoo
10-03-2025
- Business
- Yahoo
The Fourth Largest Weekly Drop in Dollar Index in Over a Decade Signals Bitcoin Bottom
The DXY Index, has experienced one of its sharpest one-week declines since 2013. The index measures the strength of the U.S. dollar against a basket of major currencies. According to Bloomberg data from Global Macro Investor, the index's one-week percentage drop has exceeded a negative four standard deviation move—a rare event that has only occurred three other times in bitcoin's (BTC) history. These previous occurrences include November 2022, when bitcoin hit its cycle low of $15,500 during the FTX collapse; March 2020, amid the covid 19 pandemic, when bitcoin briefly fell below $5,000; and the 2015 bear market, when bitcoin traded around $250. Each time the DXY Index suffered a drop larger than a -4 standard deviation, it coincided with a bitcoin bottom, followed by significant price gains. Additionally, CoinDesk research highlights that the DXY Index is currently declining at a faster rate than in President Trump's first term— a period that aligned with the 2017 bitcoin bull run. A decline in the DXY Index tends to be favourable for risk-assets, however a DXY index above 100, is still considered strong, currently at 103.8.
