Understand why the markets are expressing lack of liquidity as Tom portrays it on the charts, and also reveals what movements should you expect from this new financial week.

 

Join Tom on Google+ for more compelling and relevant updates on the markets

Price of Gold Spikes Due to Increased Demand

It was reported today 19 August 2013 that the precious metal had reached its highest price level since mid June. Analysts point to an upward trend of demand for gold holdings that has emerged over the past week.

Analysts remind readers that the price of gold has dropped considerably during the last quarter of 2013 as the US economy has begun to show signs of a strengthening recovery. Many investors including some of the leading hedge funds had previously flocked to gold as a refuge from the plummeting US dollar. Now following a series of positive economic report cards that have been issued over the past few months, a significant number of investors have indicated a renewed faith in the dollar, leaving gold to depreciate in value.

Analysts advise investors to proceed with caution on trading in gold as the market adjusts to the new increase in demand.

Euro Gains on German Growth

Trading on the Eurozones currency on 19 August 2013 is reported to have shown a significant level of gains against most of its rivals, marking another indicator of increased growth on the continent. In particular, the Euro is said to have beaten out the struggling Yen, which has fallen after reports showed an increasing trade deficit.

Analysts point to the expansion of the German manufacturing sector which is expected to move into a positive growth trend in a report set to be issued later this week on 22 August 2013. It should be noted that the German economic powerhouse has been instrumental in bringing about the Eurozones recovery with a number of positive economic reports in recent weeks. That said, it is important to remember that member states such as Greece, Portugal and Spain continue to pose a risk to the overall health of the monetary union. With upcoming German elections in September, the future of economic aid packages to the weaker states may play a role in increasing the volatility of the Euro in trading.

While there appears to be a positive trend in trading on the Euro, investors are still advised to proceed with caution in trading the currency against its rivals, particularly with the Euro/USD pairing.

Aussie Enjoys Reprieve Before Release of RBA Minutes

In the lead up to the issuance of the minutes from the Reserve Bank of Australias monthly meeting earlier this month, traders showed increased signs of confidence in the Aussie, helping it climb to a slight rise. Investors helped to push the long undercut Australian currency on hopes that the Australian monetary authority will be unlikely to make cuts to interest rates in the near future.

Analysts note that the Aussie has struggled consistently over the past few months as traders have on the whole used it for short selling against its rival currencies. In relation to the concerns over the interest rates, analysts believe that the Reserve Bank officials will likely be loathe to interfere too much at this delicate stage as the economy is still attempting to make efforts at a recovery. Experts believe that much of their decision will likely fall on the jobs figures, as well as the position of neighboring New Zealand, which has enjoyed more success in recent weeks.

Analysts advise increased caution on trading with the Aussie as it appears to remain fairly volatile in the market.