The charts that matter: gold hangs on to gains while the dollar continues higher

The gold price continued to hang on to last week’s gains, even as the US dollar powered higher this week. Here’s how that has affected the charts that matter most to the global economy.

Welcome back. 

This week, we’re looking at China. Not so very long ago, Chinese stocks looked like a good bet. The economy was booming, stocks were soaring (though many shares were mispriced, opening up all sorts of opportunities)  and it offered diversification for your portfolio. But now? Things are different.

There are three distinct worries for investors, says Cris Sholto Heaton. The country’s passion for social control and its crackdown on dissent; state meddling in private businesses; and its deteriorating relations with the West. Some private sector businesses will undoubtedly do fine, but it may be increasingly hard to pick winners.

Cris looks at some of the best ways to do that for those of you determined to buy in.

If you’re not already a subscriber, sign up here and get your first six issues free

This week’s guest on the MoneyWeek Podcast is someone with whom many of our readers may be familiar: Spencer Adair of the Monks Investment Trust. He tells Merryn about how he shuns “glamorous” growth to find solid “cockroach” companies that thrive over the long term while their competitors wither and die. Listen to what he has to say here.

Here are the links for this week’s editions of Money Morning and other web articles you may have missed:

Now for the charts of the week. 

Gold kept hold of the previous week’s gains as investors continue to worry about inflation.

(Gold: three months)

(Gold: three months)

The US dollar index (DXY – a measure of the strength of the dollar against a basket of the currencies of its major trading partners) slipped a little, but the greenback’s rise is likely to continue, says Dominic, something that is causing a “fundamental shift in the investment landscape”. 

(DXY: three months)

(DXY: three months)

Despite the dollar’s strength, the Chinese yuan (or renminbi) firmed up against it (when the red line is rising, the dollar is strengthening while the yuan is weakening). 

(Chinese yuan to the US dollar: since 25 Jun 2019)

(Chinese yuan to the US dollar: since 25 Jun 2019)

The yield on the ten-year US government bond dipped a little.

(Ten-year US Treasury yield: three months)

(Ten-year US Treasury yield: three months)

The yield on the Japanese ten-year bond rose slightly.

(Ten-year Japanese government bond yield: three months)

(Ten-year Japanese government bond yield: three months)

While the yield on the ten-year German Bund slipped further into negative territory.

(Ten-year Bund yield: three months)

(Ten-year Bund yield: three months)

Copper is looking very volatile these days. 

(Copper: nine months)

(Copper: nine months)

And the closely related Aussie dollar continued to fall against the US dollar. 

(Aussie dollar vs US dollar exchange rate: three months)

(Aussie dollar vs US dollar exchange rate: three months)

Bitcoin fell from its recent new high.

(Bitcoin: three months)

(Bitcoin: three months)

US weekly initial jobless claims fell by 1,000 to 268,000. The four-week moving average rose by 7,750 to 272,750. 

(US initial jobless claims, four-week moving average: since Jan 2020)

(US initial jobless claims, four-week moving average: since Jan 2020)

The oil price eased somewhat. 

(Brent crude oil: three months)

(Brent crude oil: three months)

Amazon's share price took off in a week when it said it would soon no longer accept Visa credit cards for payment in the UK. Could investors be looking forward to the e-commerce giant disrupting finance, too? Visa’s share price fell by 5% on the news.

(Amazon: three months)

(Amazon: three months)

And Tesla looked to be recovering from the 10% rout prompted by Elon Musk’s most recent adventures on Twitter.

(Tesla: three months)

Have a great weekend. 

Recommended

Britain’s ten most-hated shares – w/e 20 May
Stocks and shares

Britain’s ten most-hated shares – w/e 20 May

Rupert Hargreaves looks at Britain's ten-most hated shares, and what short-sellers are looking right now.
23 May 2022
Britain's most-bought shares w/e 20 May
Stocks and shares

Britain's most-bought shares w/e 20 May

A look at Britain's most-bought shares in the week ending 13 May, providing an insight into how investors are thinking and where opportunities may lie…
23 May 2022
Director dealings w/e 20 May: what company insiders are buying and selling
Stocks and shares

Director dealings w/e 20 May: what company insiders are buying and selling

Directors’ share dealings can often give investors an insight into the sentiment of company insiders. Here are some of the biggest deals by company di…
23 May 2022
Amazon’s shares have fallen hard – value investors should take note
Share tips

Amazon’s shares have fallen hard – value investors should take note

Investors have dumped Amazon shares as post-pandemic life returns to normal. But it still has plenty of competitive advantages, says Russell Hargreave…
23 May 2022

Most Popular

Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Barry Norris: we’re already in the 1970s. Here’s how to invest
Investment strategy

Barry Norris: we’re already in the 1970s. Here’s how to invest

Merryn talks to Barry Norris of Argonaut capital about the parallels between now and the 1970s; the transition to “green” energy; and the one sector w…
19 May 2022
Share tips of the week – 20 May
Share tips

Share tips of the week – 20 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 May 2022