Australia dollar dumps as gold jumps

See the latest Australian dollar analysis here:

Macro Afternoon

DXY was up again Friday night and is signaling a rise in risk:

The Australian dollar is starting to fall against all major DMs, more risk-off signal:

It’s also falling against EMs:

Gold roared back to its break out line:

Oil is hanging in there. I’m turning bearish:

Dirt was OK:

Miners were hit:

EM stocks are holding on:

Junk has slipped:

Bonds are bid:

Stocks mostly fell:

The SPX/AUD correlation is holding:

It’s an interesting mix of price signals. Forex, bonds and gold are clearly beginning to price rising risk, probably associated with a powerful second wave of virus infections. Equities and commodities are still ignoring it but for how long?

It appears increasingly likely that the AUD has topped out in its bear market rally ride.

David Llewellyn-Smith
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Comments

  1. The fed broke it. Now, they own it.MEMBER

    I’ve been too timid on gold, but now loading up. It’s the USD component of gold I’m uncomfortable with. Gold seems to now be positively correlated with USD meaning in AUD I’m getting both a currency and gold benefit. For now, happy to stick with PMGOLD. If USD starts to fall against AUD I’ll rebalance into QAU.AX which takes the currency changes out of the gold price.

    • I think you are choosing the wrong option
      I think owning gold in USD here at 68c is better
      Perth Mint has an ETF listed on NYSE but it’s very small
      AUD GOLD will rise but not as fast
      USD is the reserve currency
      AUD is a peso
      USD is the king dollar still

    • DominicMEMBER

      There is no ‘USD component‘ of gold.

      Gold is money in its own right.

      The only thing you need to decide is which of gold or USD outperforms.

      • The USD price is the benchmark.

        They’re simply saying that they think the AUD will fall against the USD and gold rise against the USD.
        So a double win.

  2. The fed broke it. Now, they own it.MEMBER

    I highly recommend listening to what Danielle DiMartino Booth has to say about the Fed. Podcast is unscripted, candid, and honest and was blown away by it.

    I love Quoth the Raven | Quoth the Raven #203 – Danielle DiMartino Booth, let’s play it!
    https://www.podbean.com/ea/pb-c7v2i-e07151

  3. BrentonMEMBER

    Worth noting that the Fed balance sheet outright contracted by $74 billion last week; the expansion had been slowing in recent weeks too.

    • It’s because they had to call the maintenance guy in to for the printer. It was overheating for some reason, will be back online this week.

    • Jim's Central Banking

      Stonks seem to be tracking the rate of Fed printing fairly well. Almost like there’s a direct correlation.