GOLD: Gold Set for Weekly Drop
Jun-27 04:13
- Gold finished the US session modestly down and that weakness flowed over into the Asia trading day, with bullion down by just over 1%
- At US$3,291.42 gold sits fractionally above the 50-day EMA of $3,209.90 having traded through the 20-day EMA earlier
- For the week, gold has lost ground by -2.27% yet remains over 24% higher year to date
- The Shanghai Gold Exchange has expanded to Hong Kong with two new contracts and a bullion vault, broadening its international reach and strengthening China's influence in commodity and currency markets. The new contracts will be denominated in yuan and settled by cash or physical delivery, with the goal of promoting wider use of the yuan in international trade and reducing reliance on the US dollar.
- Calls to bring Germany’s gold home are growing, and now voices in Italy are urging that country’s government to do the same. Germany owns the second-largest gold reserves in the world at 3,352 tonnes. Italy ranks number three with 2,452 tonnes. Both countries utilize the New York Federal Reserve Bank, storing more than a third of their gold reserves in the bank’s Manhattan vaults. (source FX Street)
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ASIA STOCKS: The Period of Big Inflows Appears to have Stalled
May-28 03:51
After an exceptional period of inflows into the major markets, it appears that this trend has stalled for now as constant daily flows are interrupted with outflows.
- South Korea: Recorded outflows of -$57m yesterday, bringing the 5-day total to -$16m. 2025 to date flows are -$11,527. The 5-day average is -$3m, the 20-day average is +$76m and the 100-day average of -$115m.
- Taiwan: Had outflows of -$322m as yesterday, with total inflows of +$1,060m over the past 5 days. YTD flows are negative at -$10,342. The 5-day average is +$212m, the 20-day average of +$414m and the 100-day average of -$115m.
- India: Had inflows of +$187m as of the 26th, with total outflows of -$1,288m over the past 5 days. YTD flows are negative -$10,391m. The 5-day average is -$258m, the 20-day average of +$153m and the 100-day average of -$115m.
- Indonesia: Had outflows of -$13m as of yesterday, with total inflows of +$140m over the prior five days. YTD flows are negative -$2,810m. The 5-day average is +$28m, the 20-day average +$13m and the 100-day average -$31m.
- Thailand: Recorded outflows of -$67m as of yesterday, inflows totaling +$7m over the past 5 days. YTD flows are negative at -$1,719m. The 5-day average is +$1m, the 20-day average of -$4m and the 100-day average of -$17m.
- Malaysia: Recorded outflows of -$40m as of yesterday, totaling -$127m over the past 5 days. YTD flows are negative at -$3,238m. The 5-day average is -$28m, the 20-day average of +$27m and the 100-day average of -$22m.
- Philippines: Saw outflows of -$1m yesterday, with net outflows of -$13m over the past 5 days. YTD flows are negative at -$257m. The 5-day average is -$3m, the 20-day average of +$2m the 100-day average of -$3m.
CHINA: Bond Futures Steady as CB Injects Liquidity
May-28 03:50
- China' s bond futures remain steady today as the Central Bank's grip on liquidity remains.
- Following today's injection, bond futures are modestly lower.
- The 10YR future is lower by -0.01 at 108.71 and has traded below the 50-day EMA of 108.72.
- The 2YR future is lower by -0.005 at 102.40; remaining below all major moving averages. The nearest being the 20-day EMA of 102.45.
- Bonds are steady with the CGB 10YR 1.70% having traded in a range of 1.62-1.70% in May.
JGBS AUCTION: 40Y Auction Delivers A Weak Result
May-28 03:45
Demand for today’s 40-year bond issuance was notably weak, with the high yield clearing well above dealer expectations. According to a Bloomberg survey, the market anticipated a yield of 3.085%, while the actual result came in at 3.135%.
- The auction’s cover ratio declined sharply to 2.2114x, down from 2.9203x at the previous issuance and marking the weakest demand since July 2024.
- As noted in the auction preview, the clearing yield was roughly 60bps above the previous auction’s result, though still 35–40bps below the recent high of 3.69% recorded earlier this month.
- The 20s/40s curve had steepened by 40bps since the last auction but remains 20bps below its recent peak.
- Given the combination of elevated yield and weak demand metrics, today’s result is likely to be regarded as very poor.
- In early afternoon trading, the 40-year bond is pricing little changed versus pre-auction levels.
