Gold Gains With Treasuries and Yen on Haven Demand

U$27 Trillion Locked In Bear MarketsA trader holds a fixed line telephone as he monitors financial information on computer screens on the trading floor at Panmure Gordon & Co. in London, U.K., on Friday, Jan. 22, 2016. Photographer: Chris Ratcliffe
  • Gold Gains With Treasuries and Yen on Haven Demand

Gold and Treasuries strengthened with the Japanese yen on lingering investor concern about global security risks and the path of U.S. interest rates. Crude struggled to extend this year’s best run.

Haven assets advanced after the White House press secretary issued a warning to Syria and as tensions over North Korea rumbled on. U.S. bond yields fell following Federal Reserve Chair Janet Yellen’s confirmation the central bank has shifted gears from post-crisis healing to sustaining economic gains. Oil wobbled after five days of gains as EIA data due Wednesday was expected to show U.S. stockpiles retreated from a record.

Policy makers want to dial back the level of support the Fed is providing the U.S. this year as America closes in on its goals of full employment and 2 percent inflation. Traders are not only having to cope with monetary tightening and the prospect of an unwinding central bank balance sheet in the world’s biggest economy, they’re also weighing President Donald Trump’s unpredictable foreign policy.

“Flight to safety drives the global markets, as geopolitical concerns occupy the global headlines with North Korea’s missile tests and growing threat against the U.S., the U.S.’s strike on Syria and Jean-Luc Mélenchon gaining support in the French election,” Ipek Ozkardeskaya, a market analyst at London Capital Group Ltd., wrote in a note.

What investors are watching:

  • U.S. Secretary of State Rex Tillerson visits Moscow this week in an effort to persuade Russia that its alliance with Bashar al-Assad is no longer in its strategic interest.
  • Federal Reserve Bank of Minneapolis President Neel Kashkari will participate in a Q&A at a meeting of the Minnesota Business Partnership.
  • The G-7 foreign ministers hold a news conference after a two-day meeting in Lucca, Italy.
  • U.K. data on Wednesday is likely to show employment has remained steady while wage growth slowed.
  • U.S. bank earnings begin with Citigroup, JPMorgan Chase & Co. and Wells Fargo early Thursday.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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