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Market News 【TOP 1 Morning】Gold price sharply down, low beyond $1,900, U.S. Dollar climbs to daily highs, Dow drops more than 500 points

【TOP 1 Morning】Gold price sharply down, low beyond $1,900, U.S. Dollar climbs to daily highs, Dow drops more than 500 points

Gold plunged nearly 70 dollars, silver fell more than 11%, and U.S. oil fell nearly 4% and below the $40.

TOPONE Markets Analyst
2020-09-22
807

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Yesterday Market Review


Gold


Gold futures dropped by nearly 3% on Monday, amid an apparent flight to dollars and rising global risks, including renewed COVID-19 lockdown measures in Europe, partly to blame as bullion prices slumped to their lowest finish in two months.


The spot gold closed at $1912.46 per ounce, volatility within the day is 1882.06-1955.49.


A selloff across global equity markets, tied partly to worries over the rise in COVID-19 cases and the potential for the renewal of restrictions on activity, as well as uncertainty over a fresh round of government relief, added to the negative tone, analysts said.


Gold is “once again not providing shelter in these hazardous times,” said Craig Erlam, senior market analyst at Oanda, in a market update. “The dollar is instead making strides higher, which is further pressuring commodity markets and taking gold with it.”


On Monday, silver had the deepest drop of 11.44%, and closed at $24.671, volatility within the day is 23.670-26.940.


Forex


The U.S. dollar soared to a nearly six-week high on Monday, and the U.S. dollar closed at 93.560, volatility within the day is93.552 - 93.632.


Indeed, the selling sentiment among the riskier assets is sustaining the continuation of the recovery in the buck.


Later in the day, the Chicago Fed National Activity Index will be the sole release seconded by FOMC’s L.Brainard (permanent voter, dovish). Moving forward, investors’ focus are expected to gyrate around the testimonies by Fed’s Powell on Tuesday, Wednesday, and Thursday.


The EUR/USD fell 0.58% to 1.1771; the GBP/USD also fell 0.77% to 1.2817. The USD/JPY also rebounded from a six-month low to 104.65.


Strategists at T.D. Securities said that amid political uncertainties, the U.S. dollar and the yen have more room to rise, which can be used as tools to hedge the risks of the general election and the risk of aggravating the epidemic.


The USD/CAD rose 0.79% to 1.3308; the AUD/USD fell 0.89% to 0.7224; theNZD/USD fell 1.35% to 0.6668.


Stock Market


Stocks fell on Monday as fears about the potential worsening of the coronavirus pandemic, as well as uncertainty on further U.S. fiscal stimulus, rattled traders.


The Dow Jones Industrial Average fell 509.72 points, or 1.84%, to close at 27,147.70. The S&P 500 lost 38.41 points, or 1.16%, to end at 3,281.06 while the Nasdaq Composite fell 14.48 points or 0.13% at 10,778.80.


Bank stocks also contributed to the broader market drop after a report found that a number of global banks moved allegedly illicit funds. Shares of Deutsche Bank dropped 8.5%, while JPMorgan Chase fell 3.3%.


Meanwhile, tensions between the U.S. and China keep escalating. China’s Ministry of Commerce released long-awaited provisions on its so-called “unreliable entity list,” a day after the U.S. announced a ban on WeChat and TikTok.


Shares of General Motors fell 4.8% after Nikola founder Trevor Milton resigned from his post of executive chairman. Milton’s departure — which sent Nikola shares down 19.3% on Monday — comes after the two companies announced a partnership earlier this month. 


Technology shares led the broader market off its coronavirus lows and into record territory, but have been hit hard so far in September — rebounded slightly. Shares of Apple rose 3%, and Netflix gained 3.7%. Amazon eked out a small gain, and Microsoft advanced 1.1%. Those stocks are still down sharply for the month, however. 


European stocks closed sharply lower Monday as allegations surrounding bank dealings and rising coronavirus infections weighed on market sentiment around the world.


Crude Oil


Oil futures fell Monday, sending U.S. prices down by more than 4%, on expectations Libyan crude will soon return to the market, while worries over a rise in European COVID-19 cases and a global equity market selloff added to the negative tone.


West Texas Intermediate crude settled at $39.771, volatility within the day is 38.892-41.498. International benchmark Brent crude closed at 42.058, volatility within the day is 41.404-43.739.


Oil prices are lower on turmoil, whether it be from mother nature or politics,” said Phil Flynn, senior market analyst at The Price Futures Group.


The return of Libya oil is weighing on prices, along with fears of more COVID-19 shutdowns, while concerns over “increasing political divides after the death of Supreme Court Justice Ruth Bader Ginsburg reduces the odds that the U.S. will get much-needed coronavirus relief,” he said.


Analysts at JBC Energy, a Vienna-based consulting firm, changed their base case to a gradual ramp-up of Libyan supply starting from the end of the month to 650,000 barrels a day in early 2021. 


The prospect of returning Libya production is particularly negative amid uncertainty over the state of the global economy as worries rise over a second wave of COVID-19 infections, analysts said.


“The global oil market is in a fragile state, given the slower than expected demand recovery, therefore any additional supply is only going to make efforts from OPEC+ to rebalance the market more difficult,” said Warren Patterson, head of commodities strategy at ING.


Focus Today


18:00(GMT+8): UK CBI Industrial Trends Orders (SEP), Previous:-44, Forecast:-40;


22:00(GMT+8): Consumer Confidence Flash (SEP), Previous:-14.7, Forecast:-14.6;


22:00(GMT+8): Fed Evans Speech;


22:30(GMT+8): Fed Chair Powell Testimony;



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