Spreadex Market Update
Bank of England hikes again and gold hits $2,000
Gold and silver soar as yields collapse
Gold began its run higher with the SVB collapse, accelerated with the forced merger of Credit Suisse into UBS and has culminated with the Federal Reserve meeting this week.
Although the kneejerk reaction across the equities and forex market had been more sanguine, the direction in metals markets has been a lot clearer. The ‘dot plot’ signalled rate hikes are all but over, and that’s good news for gold, which gained ground on Wednesday after the Fed meeting. On Thursday, the dollar regained some ground as a haven asset as bank stocks turned lower across the globe, but gold again held its own despite strength in the USD.
Every attempt since touching all-time highs to break convincingly over $2000 per oz has failed, but there’s a chance this time could be different..
BOE hikes 0.5% - looks through US bank problems
The vote split on the Monetary Policy Committee showed that seven members were in favour of pausing the policy, with Tenreyro and Dhingra dissenting. The BOE reiterated its stance to hike more if inflation remained high but forecasted inflation falling sharply over the year. The hawkish action initially sent the British pound higher, but traders took the opportunity to take profits since future rate hikes look increasingly doubtful. It was London markets that first experienced a mini financial shock when gilts went into meltdown in October. Now it has spread to other financial centres in the US and Switzerland.
Cable (GBPUSD) rose to a 7-week high of $1.234 before reversing nearly all gains to back under 1.23.
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