Latest News

MORNING BID - EUROPE - Gold at $4K. Be very, very afraid

Ankur Banerjee gives us a look at what the future holds for European and global markets

The markets are battling political turmoil in Japan, France, and the U.S. This is pushing gold to record highs, with the metal being used as a safe haven by investors.

Spot gold is in a flurry - to say it has been on fire would be an understatement. The eye-watering 50 percent gain this year comes on top of the 27% increase in 2024, and 13% in 2023.

Investors' appetite for gold is still insatiable. According to World Gold Council data, global inflows into gold-related ETFs have reached $64 billion for the year. September saw a record-breaking $17.3 billion.

Gold has been touted as the preferred hedge due to the expectation that the Federal Reserve will cut rates in the short term, concerns over geopolitical uncertainties and economic uncertainty along with the fear of an AI bubble.

This is a sign that you should be concerned.

Investors are captivated by the French political scene, where President Emmanuel Macron is under increasing pressure to resign and hold a snap parliamentary elections.

France experienced further political turmoil this week, after its fifth Prime Minister in less than two-years resigned. The markets have been frightened, as the risk premium for French government bond rates is near a 9-month high.

Even though the U.S. government shutdown is now in its eighth day, the euro has suffered and this has given some relief to the dollar.

The Japanese yen continued to fall, extending its losses of over 3% within just three sessions. The Japanese yen has returned to its mid-February level, hovering at 152.50 dollars per yen as whispered-about intervention risks are emerging.

Market reaction to Sanae Takaichi’s victory was explosive. The yen collapsed, Nikkei reached record highs, and long-end bonds yields surged due to concerns about fiscal health and declining bets on another rate increase this year.

Yet, it is difficult to predict the direction of fiscal policy in the short term. Investors hope that her stance is softer this year than it was last year.

The following are key developments that may influence the markets on Wednesday.

German Industrial Data for August

(source: Reuters)