Gold price reduced dramatically on Thursday and reached its lowest value in 19 months. The day before, on August 14, gold price was around 1193$. It fell lower and lower throughout Thursday and ended at $1173.20/oz, its lowest since January 2017, for a loss of 1.6%. The drop is dictated by the pressure caused by the further strengthening of the United States (US) dollar following the currency crisis in Turkey. It is a well-known fact that Gold and dollar usually move in opposite directions. When the dollar rises, gold futures price decreases, as gold that is valued in US dollar becomes more expensive for investors using other currencies. The economic troubles in Turkey, with lira falling down by 25 % since last week, has caused an increased demand for gold bars and jewelry in Turkey. Gold prices in lira went upwards by more than a third since March.
Iran, which has 4th largest oil reserves in the world, is currently in the center of an escalating oil price crisis. The US sanctions on Iran were activated on August 6 and they have already caused Iran’s currency – rial, to fall down by 50 % so far. Trump also issued a statement to everyone trading with Iran, warning that they would not be able to trade with the US. While the analytics predict how much of Iranian oil will the market lose later this year, the future price of oil is the hottest topic to discuss at this time. According to Bank of America Merrill Lynch, a total cut-off of Iranian exports would lead to a price spike to above $120 a barrel. Experts believe that by November, the market will lose around 2 million barrels of Iranian oil a day which will, in turn, lead to oil price growing from 75 USD to 150 and 200 $ over the next 18 months. As for August 17, the price of crude oil is around 71.8 per barrel.
August 16 was the best Dow’s trading day in four months. Optimistic investors drove the Dow Jones index higher by 396 points, or 1.6 percent to 25,559 – its biggest one day jump since April 10. The Dow was boosted by a 9.3 percent lift in the share price of America’s largest retailer Walmart after it posted quarterly earnings which surpassed market expectations. The blue-chip index was also helped by US industrial giants Boeing and Caterpillar jumping 4.3 and 3.2 percent, respectively, on the trade developments. Both companies are highly sensitive to news about trade disputes as they earn a substantial part of their revenue from outside the US.
The S&P 500 and Nasdaq indices gained 0.8 and 0.4 percent respectively. Second-quarter reporting season is winding down, with 93 percent of the S&P 500 companies having posted earnings — and 79 percent of them exceeding estimates, according to Thomson Reuters data.
This week marked growing trading dispute between Turkey and United States, as Turkey stated that it will increase tariffs on imports of a range of US products, causing diplomatic and trading war that has hit global markets and helped trigger a currency crisis. Elsewhere, the British pound posted new one-year lows against both the dollar and the yen on Wednesday, while it also retreated against the euro. Wednesday’s low of $1.2669 marked a nearly 12% slump. With the EU-UK negotiations resumed on Thursday, Brexit is likely to move firmly back into the spotlight.
Tokyo — Asian shares pulled away from one-year lows on Thursday after Beijing agreed to negotiate trade terms with Washington in August, although Turkey’s currency crisis and fears of an economic slowdown in China kept most markets in the red. On Thursday China issued a statement that a delegation led by its vice-commerce minister would travel to the US for talks in late August at the invitation of Washington. That helped Chinese stocks pare losses, with the Shanghai composite index and Hong Kong’s Hang Seng index both down 0.4%, having earlier fallen as much as 1.9% and 1.7%, respectively. Japan’s Nikkei swung into positive territory, up 0.2% on the day, but was down as much as 1.5% in morning trade. The euro rose 0.3% and the offshore Chinese yuan gained 0.4% following the news on China.