The AUD (Australian Dollar) is on a winning streak! It has been strengthening for the last 6 consecutive days as the US Dollar continues to weaken. This change has given further impetus to the AUD/USD currency pair, which in recent weeks retook a yearly high of 0.6400. Gold prices have recently rocketed, shattering through $3,340 per troy ounce. This increase is largely being driven by increasing US-China trade tensions and a weakening US Dollar.
The recent falls in the US Dollar have taken quite a bit of wind from the AUD’s sails. It has led to seismic shifts in the global gold market. Fears that the United States may enter into a trade war with China are increasing. Nevertheless, amidst all this, investors are running to safer assets such as gold, pushing prices sharply higher. I believe the trend behind the rise in gold prices is the flight to safety. It’s due to the weakening US Dollar, which tends to inflate commodity prices.
On Wednesday, gold spiked to all-time highs on the back of these escalating concerns about US-China trade war. Gold prices continued to soar, in fact, following Federal Reserve Chairman Jerome Powell’s highly anticipated speech last week. His remarks didn’t provide any of the big news that might change market sentiment. Traders appeared undeterred by Powell’s remarks, as they maintained a cautious outlook while awaiting developments regarding potential new trading agreements from President Donald Trump’s administration.
The AUD/USD currency pair has shown great fortitude over this stretch. It has now retraced to yearly highs, clearing decisively above its key 200-day Simple Moving Average (SMA). This technical level has been an important pivot point for traders and breaking above it could spark even more buying momentum. The AUD’s strength is largely the result of broader market dynamics driven by the weakening US Dollar.
The EUR/USD pair oscillated on a neutral tone around 1.1400 level in the early Asian session on Thursday. This stability comes as traders analyze the impacts of US economic policies and ongoing trade tensions on the Eurozone’s economic environment. Despite a surge in the AUD’s fortunes, the EUR hasn’t moved much at all, even as this story has developed.
While global markets are starting to adapt to this new reality, traders are still on high alert. Continuing ambiguity creates a nervous environment for US-China trade relations. Participants continue to keep an eye out for new opportunities that break through the noise. The interplay of these factors, US Dollar weakness, commodity price fluctuations, and geopolitical tensions, will likely continue to shape market conditions in the days ahead.