Plunging gold price knocks dollar
Late on Friday, the local currency was trading at US92.62¢, down from US93.17¢ on Thursday.
ForexCT head of research Steven Dooley said the gold sell-off was related to the US Federal Reserve's comments on scaling back the $US85 billion-a-month ($92 billion) bond purchase program, designed to stimulate the economy.
"A lot of institutions or hedge funds in Asia were taking a lot of pain from their gold positions and they were forced to liquidate and that's dragging the Aussie dollar down," he said.
CMC Markets senior trader Tim Waterer said people were selling riskier assets and taking profits before the end of the financial year.
"Month-end position squaring created some downward price pressure on the Australian dollar, with the currency also being hindered by further weakness in the gold price," he said.
The Australian dollar started the financial year trading at US102.66¢, and so far has lost 9.8 per cent against the greenback.
The Australian dollar was at ¥91.58, down from Thursday's close of ¥91.31, and at €70.97¢, down from €71.49¢.
Meanwhile, Australian bond futures prices were higher in a quiet day for local bonds compared with earlier in the week.
Westpac interest rate strategist Tim Jung said the rally in bond futures prices was probably the result of investors taking profits and moving out of more volatile assets at the end of the month.
The September 10-year bond futures contract was at 96.225 (implying a yield of 3.775 per cent), up from 96.160 (3.840 per cent) on Thursday. The three-year contract was at 97.220 (2.780 per cent), up from 97.140 (2.860 per cent).
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The article links the AUD's weakness to a sharp fall in the gold price — which dropped below US$1,200 an ounce for the first time in almost three years. Traders say large institutions and hedge funds, particularly in Asia, were forced to liquidate gold positions, and that selling pressure dragged the Australian dollar down.
ForexCT's head of research, Steven Dooley, said the gold sell-off was tied to Federal Reserve comments about scaling back its US$85 billion-a-month bond purchase program. Those comments prompted repositioning in markets that hit gold prices and, indirectly, the Australian dollar.
CMC Markets senior trader Tim Waterer noted that month‑end position squaring and investors taking profits ahead of the end of the financial year created extra downward pressure on risk assets — including the Australian dollar — as people reduced exposure to riskier positions.
According to the article, the Australian dollar started the financial year trading at US102.66¢ and has lost about 9.8% against the US dollar so far.
The article reported the Australian dollar trading around US92.62¢ (down from US93.17¢ on Thursday). It also quoted levels near £91.58 and about €70.97¢ on the same day.
Australian bond futures prices rose on a relatively quiet day for local bonds. The September 10‑year bond futures contract was 96.225 (implying a yield of 3.775%), up from 96.160 (3.840%), and the three‑year contract was 97.220 (2.780%), up from 97.140 (2.860%). Higher futures prices imply slightly lower implied yields.
The article quoted ForexCT head of research Steven Dooley, who linked the gold sell‑off to Fed comments and forced liquidations; CMC Markets senior trader Tim Waterer, who pointed to month‑end profit‑taking and risk‑asset selling; and Westpac interest rate strategist Tim Jung, who said the bond futures rally likely reflected investors taking profits and moving out of more volatile assets.
The article highlights that big moves in gold — driven by central bank signals and institutional liquidation — can spill over into currency markets like the AUD. Everyday investors should be aware that macro comments (for example from the Federal Reserve), month‑end positioning and large fund sell‑offs can create short‑term volatility in both commodities and exchange rates.
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