Nice setup for gold,hard commodities

00:00:00: Global equities started the week cautiously as semi-conductor stocks extended losses on Monday, while geopolitical entry tensions intensified.

00:00:09: Fresh West sanctions on Iran and threat of secondary sanctions add uncertainty to market today particularly around what China will say about them.

00:00:18: Meanwhile, US Treasury's potential support for bond buybacks could ease pressure on longer-term yields and support asset valuations but also risks complicating the Fed's inflation fight.

00:00:30: so unsurprisingly in this context, appetite for hard commodities return.

00:00:35: So welcome to Swissco's daily market.

00:00:37: talk is Tuesday the twenty-fifth of August.

00:00:40: I'm Ipek Oskar Deshkere.

00:00:41: we will talk about many important topics today but before we do and as always please keep in mind that opinions are my own.

00:00:57: So despite

00:00:59: a retreat in oil prices on Monday, global equities made a timid start to the new week.

00:01:04: The FTSEA hundred index which is having energy and mining stocks gained despite pressure from oil companies while technology heavy US peers were hit by another wave of chip sell-off.

00:01:14: Van Aksmi conductor ETF fell another two point forty three percent yesterday And this ETF is now down by more than eighteen per cent since its June peak.

00:01:24: A sentiment in Asia is better this morning, but the geopolitical and trade war headlines pop up everywhere right now suggesting that US relationship with the rest of world may be just about to get worse.

00:01:38: And that's going to have financial implications obviously for global equity and bond markets.

00:01:43: Speaking of which, while Besson yesterday announced heavy sanctions against Iran, but he also announced secondary sanctions for those who do business with Iran.

00:01:53: Now the US didn't mention directly the name of China But China is one of Iran's biggest clients For its oil and they had already made it very much clear indeed that The?

00:02:03: U?

00:02:03: S sanctions if They don't make sense according to the Chinese law wouldn't be taken into account.

00:02:10: So now everyone Is waiting To see the collateral damages Of a war That the?

00:02:14: u?

00:02:14: s has reportedly limited means to continue fighting.

00:02:18: Speaking of means, for US Treasury Secretary Mr Besson made another important announcement yesterday.

00:02:23: CNBC reported that the U.S.

00:02:25: Treasury could potentially tap its roughly nine hundred and thirty five billion USD treasury general account at the Federal Reserve to fund expanded bond buybacks that Mr Bessen was talking about last week.

00:02:38: That's not too bad!

00:02:44: cash account rather than on new and short-term debt.

00:03:08: for bond prices because it has potential to pull yields lower and support equity valuations.

00:03:21: But on the other hand, keeping bargain costs under pressure would also mean that financial conditions in the US will be looser than what the Federal Reserve would like to tame and bring inflation back to its two percent policy target in the U.S.. Therefore if U. S. Steals remain subdued due intervention from the US Treasury not necessarily backed by fundamentals it'll cost for both of them.

00:03:46: due to the Treasury's general account meltdown and to people as well, due to higher inflation.

00:03:51: So obviously the best is still and a small in the Middle East bring energy prices lower and also maybe rain on the growing budget deficit of US actions that have not yet made their way into the US administration playbook.

00:04:05: As such again U.S.

00:04:06: Treasury throwing its full support behind us bond market will continue to bring liquidity to the market and that liquidity will have to go somewhere, and that will mathematically support valuations of risky assets.

00:04:19: And it's exactly what the Fed's QE did since nearly two decades!

00:04:23: It was sometimes criticized but it DID help bring liquidity TO THE MARKET AND SUPPORT EQUITY VALUATIONS.

00:04:29: The thing is...the post-global financial crisis period was marked by low inflation in the US But today US inflation is running persistently above target and inflation hits everyday goods & services prices, not only equity prices.

00:04:45: As such all eyes will be turning to the Federal Reserve to see how the Fed responds.

00:04:55: make the inflation picture, the inflation outlook in the US more complicated.

00:04:59: New Chair Kevin Walsh will speak on Friday at Jackson Hole Symposium after The U.S reveals on Wednesday its latest PCE figures – the core PCE figure being the Fed's favorite coach of inflation.

00:05:12: All that complexity in the inflation outlook and what's going on inside US is reflected in bullish price action in gold, but also other hot commodities prices.

00:05:22: Renewed appetite in Gold despite rising long-term U.S.

00:05:25: yields are striking indeed and sends a clear message to market investors moving back to the precious metal as one?

00:05:32: to hedge themselves against the US unclear fiscal plans and lack of convection from U.S administration capacity, when military expenses are also adding on heavy bills too?

00:05:46: to hedge against inflation, aim at FEDs willing this or the possibility of fighting inflation independently from the White House.

00:05:53: And three potential selloff across global risk assets on worries about high valuations there.

00:05:58: The massive AI spending and the growing financing web has building around these companies that are involved in building the AI ecosystem so-called circularity.

00:06:09: So last Friday gold cleared an important technical resistance to forty five thirty dollars per ounce level, which is both the two hundred day moving average and major thirty eight point two percent Fibonacci retracement on January to July retreat.

00:06:24: The price of an ounce flirted with the forty seven hundred dollars offered this morning in Asia before giving back part of

00:06:31: gains.".

00:06:31: The question today is will gold get our enough momentum to return above a five thousand dollar psychological mark sustainably?

00:06:39: Well, the answer is possibly yes.

00:06:41: So it's a broad de-dollarization trade as quite building or not so quietly building in the background that is justified by global institutions efforts to replace their US Treasury holdings.

00:06:52: buy gold remains supportive of Gold in the longer run and the shorter runs always bit more complicated because over about conditions off today could lead to downside corrections in this short one.

00:07:04: giving hands step buying opportunities too long term bulls And zooming out, hard commodities other than gold are also having a moment.

00:07:12: since last week.

00:07:13: Among them, Bitcoin rallied more then thirty per cent and copper which is one of my favourite industrial metals in this ARH is pushing higher with the positive momentum being backed by... bad wardation.

00:07:27: That means that spot price is higher than its future prices, which in turn is backed by strong fundamentals today.

00:07:33: Copper supply and inventories struggle to keep pace with strong demand growth driven by electrification and AI buildout.

00:07:41: The supplier remains tight And the widening demand-supply gap makes traders willing pay a large premium for copper now rather then copper delivered later.

00:07:50: We even saw a big squeeze in London last week remember?

00:07:53: As such, the medium to long term outlook for copper remains positive.

00:07:57: The physical market as I said is tight demand continues to grow while also the macroeconomic setup of the moment with rising inflation expectations everywhere in the world increases appetite for hard commodities and such any retreat that we might see in copper prices or copper miners.

00:08:16: stock prices could eventually offer interesting dip buying opportunities or to strengthen their existing long exposure to these metals and metal miners.

00:08:28: Global X-Couple Miners ETF, for example, rallied more than two hundred fifteen percent between April twenty thousand twenty five to January of this year And after an early year retreat is now back approaching its record high levels.

00:08:43: Better yet investors could also allocate capital To the more diversified range mining complex to hedge against supply geopolitical and inflation risk via ETFs like S&Ps, GSCI Industrial Metals, ETF for example that attracts five metals aluminum copper zinc nickel and lead helps diversify the idiosyncratic risks around these metals but also help investors to play their longer term macroeconomic game.

00:09:12: So this is all for today.

00:09:13: I'm Ipeko Skardeyshkaya And thank you for joining me.

00:09:16: Thank You For All Your Beautiful And Supportive Comments.

00:09:20: This episode of Market Talk has been helpful and it's been insightful to you.

00:09:25: So please do not hesitate to leave your comments, reactions or questions below.

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00:09:50: So I will meet you again tomorrow.

00:09:53: And until then, good day

00:10:09: trading!