China fails to excite Gold prices
Last time I appeared Greece was centre stage with its referendum just hours away. Fast forward two weeks and the drama has eased a little with a new bailout proposal on the table. However this won’t be the solution Greece needs - and there will be further political fallout.
Now the news of Greece is ‘so last week’ with major stock markets around the world posting strong gains as concerns not only eased about Greece but also about China. Well-received US earnings reports also aided markets.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 21 Jul 15
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Last time I appeared Greece was centre stage with its referendum just hours away. Fast forward two weeks and the drama has eased a little with a new bailout proposal on the table. However this won’t be the solution Greece needs - and there will be further political fallout.
Now the news of Greece is ‘so last week’ with major stock markets around the world posting strong gains as concerns not only eased about Greece but also about China. Well-received US earnings reports also aided markets.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
Now the news of Greece is ‘so last week’ with major stock markets around the world posting strong gains as concerns not only eased about Greece but also about China. Well-received US earnings reports also aided markets.
First to China, where the Composite Index in Shanghai was up slightly for the week giving investors hope that recent actions by the Chinese authorities to stem the market's recent selloff are working.
The ability of China to contain the fallout is still one of the main risks associated with global equity market performance this year.
Also China has increased its official Gold holdings by 57% since June 2009 – this was the last time the PBOC reported its reserves. However - the announcement did little for the gold price which has fallen further.
China holds much less in gold reserves than most developing and advanced countries, and we expect they will continue to buy more in the next year or two.
The US dollar has continued its upward momentum with the latest US inflation data keeping the Federal Reserve on track to raise interest rates this year. Chair of the Federal Reserve - Janet Yellen - also said last week that such a move would be "appropriate" if the economy evolves as she expects. I still believe September is likely, although others in the market are predicting December.
The dollars of Australia, New Zealand and Canada have been three of the worst performing major currencies so far this year. This is largely due to the expectation that falling commodity prices will have an adverse effect on economic activity of these countries.
Commodity price weakness has calmed for now - and I believe we’ve seen the end of big falls in exports such as oil, iron, gold and dairy. However - sentiment towards commodities remains negative so I don’t expect we’ll see strength in the Australian dollar soon.