Fundamental Daily Gold Price Forecasts – Evergrande’s Renewed Uncertainty Fuels Bilateral Response


Gold is trading higher but within a narrow range on Friday after a drop in Treasury yields pushed investors into the non-performing asset. Gains are likely capped by a stronger US dollar. The catalysts behind Friday’s price action are renewed concerns over the fate of China’s Evergrande debt payments.

At 11:43 GMT, December Comex gold is trading at $ 1,752.50, up $ 2.70 or + 0.15%.

Today’s price action suggests traders may have gotten past yesterday’s weakness that was fueled by Wednesday’s hawkish comments from the Fed regarding the timing of its cut plans and first hike rate.

It is difficult to say at this time whether gold traders are turning into buyers due to China’s warning to local authorities about a possible collapse of Evergrande or sellers due to rate hike prospects from several banks. power stations.

Gold is trading almost flat this week despite increased volatility. This suggests that traders are unsure of how to play off the uncertainty on Evergrande, which has pushed investors towards the safety of the US dollar and other themes ranging from Fed expectations to lower and higher rates.

Ultimately, it all comes down to the direction of interest rates and, to some extent, the US dollar. When not moving in the same direction, gold traders have a hard time figuring out which direction they want to rely on. This tends to lead to low volume, which tightens the trading range.

Evergrande remains silent on its $ 83 million bond interest payment, leaving investors in limbo

Obviously, Evergrande’s debt problem isn’t going away anytime soon and should remain a concern until the weekend. This could be the source of volatility throughout today’s session, particularly until the close.

Chinese real estate developer Evergrande has not said whether it will meet its interest payments on its US dollar bond, a key step investors are watching.

The interest payment due Thursday was $ 83 million. It was a $ 2 billion dollar-denominated bond that was due to mature in March 2022. Dollar bonds are typically held by foreign investors.

On Friday morning, during business hours in Asia, the company had made no announcements or deposits with the Hong Kong Stock Exchange, leaving investors in limbo.

Evergrande has warned he could default on his debt. Investors are watching developments closely, amid fears of contagion that could spill over to other markets.

Chinese authorities have reportedly asked local authorities to prepare for Evergrande’s potential disappearance, according to the Wall Street Journal.

Gold traders should be prepared to dance the volatility dance with Evergrande’s debt payments due each month in October, November and December.

For an overview of all of today’s economic events, check out our economic calendar.

This article originally appeared on FX Empire

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Julio V. Miller

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