Markets are looking for peaks. Both gold and cryptocurrencies rebounded yesterday by around 1% or less from all-time highs. Slower falling inflation in Switzerland in the background.
Madness on gold
The market looks like gold prices have gone nuts. Over the past 2 days, the commodity has gone up almost 4%, reaching $2130 per ounce. An ounce of gold is roughly 31.10 grams, as it’s a troy ounce, which is slightly heavier than the standard ounce, weighing 28.35 grams. Precious metals, like oil, are priced in American units of measurement, hence they have their own units, inconvenient from our perspective. Current growth are not yet the highest in history, but we are already missing only about 1%. There are many theories explaining these increases on markets. On one hand, the end of the FED’s bank support program is pointed out. This is quite a bold concept, as the end of this program should rather force banks to sell reserves and investments. On the other hand, there is a discussion whether these are purchases by one of the large market participants. Considering the current price, last year’s large gold purchases by the NBP now seem to be a very effective decision.
Inflation decrease lower than expected
Yesterday, weaker-than-expected inflation data in Switzerland was published. Year-on-year it is 1.2%, however, it was expected to be 0.1% less. In theory, inflation is within the target of the Swiss National Bank, therefore these data should not be of interest to us. However, it is worth noting that interest rates from the point of view of Switzerland are still on rather high levels. As a result, many investors are waiting for signs of upcoming reductions. The slower-than-expected falling inflation, however, is a signal suggesting that these cuts are being postponed. It is also a stimulus that should counteract the weakening of the Swiss franc. We saw exactly this move yesterday in the morning hours. However, the franc’s strengthening did not last until the end of the day. This will certainly not be complained about by franc borrowers, especially since we are close to popular loan repayment dates.
Bitcoin is attacking records
Yesterday’s peak prices of the most popular cryptocurrency almost matched the all-time record. However, it should be remembered that such analyses do not take inflation into account. The cumulative inflation in the US during this time was over 10%. Therefore, if we looked at the real value, the current prices are much further from the peaks from the perspective of the real value of money.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
