Gold, silver and the dollar make an intriguing and sometimes infuriating trio of assets, linked to each other but frequently at odds. Navigating their relationship in the market calls for a solid understanding of the factors that affect them.
The Hong Kong stock market is now the world’s third largest, overtaking the once-invincible Tokyo. A link with mainland Chinese exchanges has helped market capitalisation to soar during recent years.
The pound strengthened on foreign exchanges this morning as the government and the opposition Labour Party prepared for Brexit discussions to continue over Easter. Cabinet Office minister David Lidington has said both sides will “take stock” ten days from now.
If commodities in general tend to un-nerve novice traders, agricultural commodities can be particularly off-putting with uncertainties about harvests and the weather. But if you are properly prepared, then trading coffee should be no more stressful than making your morning cup.
Despite geo-political tensions, the price of oil remains buoyant. But increasing US output could put crude prices under pressure once more.
Sometimes treated as the little sister of the larger Australian dollar, New Zealand’s currency has held its value against major denominations during a period of geo-political instability. The dollar’s resilience reflects an economic success story that has won praise from the International Monetary Fund.
The price of gold seems barely to have budged during the last three months, but there have been some significant ups and downs along the way. Traders need to remember that gold is priced in dollars, so they need to watch both the US currency and bullion movements to make informed decisions.
A sure-fire method for annoying a veteran trader is to mix up volatility and risk, treating big swings in securities prices as identical with the danger of loss. But nor can they be entirely separated, and the key to trading success is a firm grasp of how these different but overlapping concepts fit together.
London stock markets showed modest gains as MPs tried to break the deadlock on Brexit. They will vote on various options to find a way forward and end the current stalemate in Parliament.
The practice of “shorting” a stock or any other security – selling at today’s price in the expectation that its value will fall – has long been seen by many as disreputable. But it is simply another way of expressing a market view, no different from any other.
Oil prices have been bucked by confirmation that leading crude producers remain committed to observing a package of production curbs. But a call to support fellow petroleum exporter Venezuela in a stand-off with Washington may herald trouble ahead.
History would suggest the sort of political turmoil seen so far during Donald Trump’s tenure in the White House would have rocked the US dollar, with knock-on effects for other currencies round the world. But at the half-way point, the “greenback” has held quite steady, although that could change very quickly.
Currencies are priced in other currencies, and all major denominations are quoted in “cross rates” against each other. Traders may choose a fairly predictable “pair”, such as the US dollar and the euro, or something more exotic, but in all cases good research is essential in deciding the best currencies to trade.
Gold prices have swung round during the past 12 months in a trading range of more than $170. But at the end of the period, they were pretty much where they started, perhaps underlining bullion’s reputation for stability.
Switzerland’s top stock index has climbed steadily for the past year, helped by a more competitive currency and strong economic growth. But challenges remain for the Zurich market, not least the possibility of a trade war hitting the country’s export sector.