James Hughes, Market Commentator for eToro, joins Tip Tv to discuss on Gold, Commodities, US equity, and rate hike scenario in UK and US.
Key points from the video:
Gold market seeing exaggerated moves
Commodity rout, more inflow into commodity FX
Fed rate hike: 2016 remains favoured for the start of the US rate hike cycle.
Commodity rout, problem for trading
Falling commodities is causing a problem in trading with EUR ignoring news flow, notes Hughes. In the forex space, he explains why the commodity FX remains the big movers, with a lot of money leaving the euro and pouring down into the commodity-bloc.
Why is Gold weak?
Markets are moving away from EUR trades, and Fed rate hike expectation is creating uncertainty on USD. All of this money is supposed to flow into Gold, but Gold has broken below the key $1100 levels. The precious metal sees no significant support till the $1000 psychological level $1000. This behaviour of taking out major supports is being seen in the FX space too.
Going short on US indices
Hughes discusses how the long gold market has now moved into short US equities after seeing losses in their bullish trades.
Fed hike & US market
Hughes predicts the Fed to start its rate normalization program in early 2016, and not in September-December. He further expects any hike in September to be minimal, and not affect the US markets to a higher extend.