Mar 2020


Mar 2020

Weekly markets round-up for StoneX Bullion

By StoneX Bullion

Welcome to a very brief overview of the recent performance in the markets. The essentials are captured in the table below and each week we will show a chart of interest.

Last week’s gold price shot up in the wake of the announcement from the Federal Reserve Board in the United States (I.e. the U.S. Central Bank) that it was preparing to inject unlimited funds into the financial system. The important difference in the Fed’s announcement from previously is that small and medium-sized businesses will be among the areas targeted.

The significance of this is that it goes beyond the Fed’s normal monetary actions, which are usually contained to the money markets. In the wake of the Financial Crash of 2008 there was a good deal of resentment in industry because the banks were reportedly holding on to a lot of the Quantitively Easing funds from the Fed as they shored up their balance sheets and did not pass on as much funding through to industry as was expected.

Later last week, after much wrangling with Democrats opposing the initial Bill on the basis that it was too highly geared towards large corporates and demanding more focus on the smaller companies in the economy, the $2.2Trl Bill was passed and has now been signed into law. It is possible, if not probable, that the Fed’s actions in changing its focus towards businesses will have given the Democrats fire-power in this debate, as their argument was that the Bill as initially presented was too closely geared towards supporting major corporate bodies and nowhere near enough for the smaller man.

As the chart below shows, gold rallied hard on Monday and again on Tuesday, rising from $1,485 (Monday’s low) to an intraday high on Tuesday of $1,632; this was certainly driven in part by heavy short covering on the part of the Money Managers, taking their remaining position, according to the Commodity Futures Trading Commission, to just five tonnes last Tuesday night.

Gold has traded in a narrow range since as the market has tried to consolidate. Coin sales remain robust, while ETFs added 64t last week after redemptions of 59t in the seven previous trading days. ETFs now stand at a record 2,791 t (equivalent to ten months’ global gold mine production) and gold Eagle sales in the month to date have reached 142,000 ounces against a monthly average last year of 12,583 ounces.

Chart for the week

CFTC reported managed money contract positioning (tonnes)