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Interest Rates Hikes (effect on Currencies & Gold)

PostPosted: Wed Oct 14, 2009 8:16 am
by mark04
When a company raises its dividend, its stock becomes more attractive to investors. Its share price rises. When a bank raises interest rates on its savings accounts, people deposit more money in the bank. It's the same way in the currency markets. Rising interest rates make a currency more attractive and it rises against other currencies with stable interest rates. Central banks around the world have been cutting rates for two years, and interest rates are as low now as they've ever been.

The governor of Australia's central bank hinted there would be more interest rate rises on the way. This could be the start of a new trend of rising interest rates around the world. If this is the start of a new trend of rising world interest rates, you can expect big new trends in the currency exchange markets, too. That's because interest rates are the single most important driver of exchange rates in the currency markets.

So how do we make money from a new global trend of rising interest rates?

While other central banks are considering raising rates, the Fed has so far refused to join the party. The dollar is the worst-performing major currency in the world this year as a result.

The recent unemployment report showed that somewhere close to 6 million jobs have vanished from the American economy in the last 18 months. The employment situation hasn't been this bad. With the ongoing unemployment, rate hikes in America are unlikely until next year.

First, this gives us a great opportunity to buy the dollar right now, while it's cheap and no one is anticipating rate hikes from the Fed. By the time Bernanke announces his first rate hike next year, the dollar will have already rallied 10% or more.
Second, a trend of rising interest rates on currencies is great for people looking to buy gold at lower prices. Gold has no interest rate. So when interest rates rise on world currencies, they become more attractive – and they rise – relative to gold. This is especially true with the dollar. It's the world's reserve currency and gold is incredibly sensitive to movements in its interest and exchange rates.

As long as unemployment keeps rising, there's no way the Fed raises interest rates and gold prices will stay high. But next year is a different story. The first hint of rate increases by the Fed will send shockwaves into the gold market.

Regards
Mark

Re: Interest Rates Hikes (effect on Currencies & Gold)

PostPosted: Wed Jul 28, 2010 11:43 am
by MDunleavy
Gold' fall from 1266.5 resumes by taking out 1175.1 and reaches as slow as 1156.9 so far. Short term outlook will now remain bearish as long as 1203.9 resistance holds and we'd expect deeper decline to 1124.3 support next.

"P&F GOLD30 Box Size $6X3 or(1.49%) HI/LO
Data 1265.02 - 1157.88 ~ 2 Month ~ 62.92 Day
Database 2056 records 1161.33 (Last Close)
2010-05-26 16~00
2010-07-28 14~00 (GMT+01:00) Paris
BJF Trading Group MDunleavy chart"

Code: Select all
1260.00|~6$||__________________x_+_____________|0.4%|8.82%
1254.00|~12$|__________x_o_x_o___o_+___________|0.87%|8.3%
1248.00|~18$|______x___x_o_x_____o___+_________|1.35%|7.78%
1242.00|~24$|______x_o_x_o_x_____o_____+_______|1.82%|7.27%
1236.00|~3O$|______x_o_x_o_x___+_o_______+_____|2.29%|6.75%
1230.00|~36$|______x_o_x_o___+___o_________+___|2.77%|6.23%
1224.00|~42$|__x___x_o_x___+_____o___________+_|3.24%|5.71%
1218.00|~48$|o_x_o_x_o___+_______o_____________|3.72%|5.19%
1212.00|~54$|o_x_o_x___+_________o_____x_______|4.19%|4.67%
1206.00|~6O$|o___o_x_+___________o_x___x_o_____|4.67%|4.16%
1200.00|~66$|____o_+_____________o_x_o_x_o_x___|5.14%|3.64%
1194.00|~72$|____+_______________o_x_o_x_o_x_o_|5.61%|3.12%
1188.00|~78$|____________________o___o___o_x_o_|6.09%|2.6%
1182.00|~84$|____________________________o_x_o_|6.56%|2.08%
1176.00|~9O$|____________________________o_+_o_|7.04%|1.56%
1170.00|~96$|____________________________+___o_|7.51%|1.05%
1164.0|~1O2$|________________________________oV|7.99%|0.53%
1158.0|~1O8$|________________________________oV|8.46%|0.01%
1152.0|~114$|________________________________+V|8.93%|-0.51%
Column|||||||3_3_4_8_5_6_5_4_1_1_1_3_3_4_6_4_7V|
Count||||||||____________________2____________V|


Image Image
BJF Trading Group. Excel Chart. Full size.

Re: Interest Rates Hikes (effect on Currencies & Gold)

PostPosted: Mon Nov 01, 2010 4:31 am
by MDunleavy
I predict bearish trend...
Trade Idea: GOLD - Sell (Stop Limit) at 1356; Target: 1296 ; Stop: 1368.
See the details on the charts.

"P&F GOLD10080 Box Size40X2 or(9.76%) HI/LO
Data 1387.03 - 251.7 ~ 233.81 Month ~ 6874 Day
Database 989 records 1358.95 (Last Close)
1991-12-29 00~00
2010-10-24 00~00 (GMT+01:00) Paris
BJF Trading Group MDunleavy chart"
Code: Select all
1400.00|~4O|__________________________________________+_|456.22%
1360.00|~8O|__________________________________________x_|440.33%
1320.0|~120|__________________________________________x_|424.43%
1280.0|~160|______________________________________+___x_|408.54%
1240.0|~2O0|______________________________________x_+_x_|392.65%
1200.0|~240|______________________________x_______x_o_x_|376.76%
1160.0|~280|______________________________x_o_x___x_o___|360.87%
1120.0|~320|______________________________x_o_x_o_x_____|344.97%
1080.0|~360|______________________________x_o___o_______|329.08%
1040.0|~4O0|______________________________x_____________|313.19%
1000.0|~440|______________x___________x___x___________+_|297.30%
960.00|~480|______________x_o_x_______x_o_x_________+___|281.41%
920.00|~520|______________x_o_x_o_x___x_o_x_______+_____|265.51%
880.00|~560|______________x_o___o_x_o_x_o_______+_______|249.62%
840.00|~6O0|______________x_____o_x_o_x_______+_________|233.73%
800.00|~640|______________x_____o_x_o_x_____+___________|217.84%
760.00|~680|______________x_____o___o_x___+_____________|201.95%
720.00|~720|______x_______x_________o___+_______________|186.05%
680.00|~760|______x_o_____x___________+_________________|170.16%
640.00|~8O0|______x_o_x___x_________+___________________|154.27%
600.00|~840|______x_o_x_o_x_______+_____________________|138.38%
560.00|~880|______x_o___o_______+_______________________|122.49%
520.00|~920|______x___________+_________________________|106.60%
480.00|~960|______x_________+___________________________||90.70%
440.0|~1O00|______x_______+_____________________________||74.81%
400.0|~1O40|__x___x_____+_______________________________||58.92%
360.0|~1O80|__x_o_x___+_________________________________||43.03%
320.0|~1120|____o_x_+___________________________________||27.14%
280.0|~1160|____o_+_____________________________________||11.24%
240.0|~1200|____+_______________________________________||-4.65%
Column|~||||O_2_3_1_4_2_2_1_3_2_5_4_5_7_3_8_3_2_2_4_2_5_|
Count|~|||||______1_______1_____________________________|

Image Image

BJF Trading Group. Excel Chart. Full size attached.