In the previous editions of the Market Overview, we have already analyzed the relationship between gold and some major world currencies, such as the U.S. dollar, the euro, or the Japanese yen. But what is the link between the Chinese yuan (officially: renminbi) and the yellow metal?
The euro has eased off across the board on a Bloomberg report that the European Central Bank may reduce its bond purchases to €30 billion per month from January and simultaneously extend the duration of the QE programme by another nine months to at least September 2018.
Key data from Australia and China will be released in the early hours of Thursday, followed by inflation figures from the U.S. later on in Thursday’s session. Thursday’s data releases could have a big impact on the Aussie dollar, especially the AUD/USD pair.
The October contract has risen 5.25 off their lows from the 1st. This is not that unusual. As noted all last week, the market often does not like to the August expire and the next contract out hold such a steep discount to current cash prices. We can argue all we want that this discount is needed, and may, in fact, be too small based on the supply change coming, but that does not matter. From a simple optics perspective, a $20 discount is too much.