Key Points:

• PCE Data Impact: Anticipation of the US Personal Consumption Expenditures (PCE) Price Index release is causing marginal declines in gold prices, with potential volatility based on the results.
• Long-Term Uptrend: Despite recent dips, gold’s long-term uptrend remains intact, suggesting continued strength as a stable investment.
• Geopolitical Uncertainties: Ongoing geopolitical tensions, such as in the Middle East and Ukraine, are boosting gold demand as a safe haven.
• FOMC Sentiment: Mixed outlook on future rate cuts from the Federal Open Market Committee creates uncertainty for gold investors, potentially leading to price fluctuations.

As we anticipate the release of the US Personal Consumption Expenditures (PCE) Price Index for June, gold (XAU/USD) prices edge marginally upper 0.33%, trading in the $2,400. This economic indicator could inject volatility into the market, potentially shaking the recent stability of gold prices.

Daily Digest Market Movers: Gold Price Recovers the $2,400 Figure

Gold traders are focused on the release of key economic data, including Durable Goods Orders, the preliminary Q2 GDP number, and the Core PCE for June. Durable Goods Orders are expected to increase from 0.1% to 0.4% month-over-month (MoM). The Gross Domestic Product (GDP) for Q2 is projected to rise from 1.4% in Q1 2024 to 1.9% quarter-over-quarter (QoQ), indicating that the economy is accelerating as the year progresses. The Fed’s preferred measure of inflation, the Core PCE, is expected to dip from 2.6% to 2.5% year-over-year (YoY). The latest Consumer Price Index (CPI) data revealed a continuation of the disinflation process in the United States (US), boosting gold prices and increasing the likelihood that the Fed will cut interest rates starting in September.

The PCE Data’s Impact on Gold Prices

The PCE data is crucial as it is the Federal Reserve’s preferred inflation gauge. Higher inflation could prompt the Fed to adjust interest rates, impacting gold prices as gold is a non-interest-bearing asset. Stable or rising consumer spending could support a resilient economy, potentially leading to higher interest rates, which might negatively impact gold. Strong business investment would indicate economic health, possibly leading to higher interest rates. A robust GDP report could bolster the case for higher interest rates, affecting gold’s appeal.

FOMC Sentiment and the Mixed Outlook on Rate Cuts

The Federal Open Market Committee (FOMC) has a mixed outlook on future rate cuts. While some members anticipate the need for rate cuts in the near future, others remain cautious, creating an environment of uncertainty for gold investors. This mixed sentiment can lead to fluctuations in gold prices as investors react to the potential changes in monetary policy.

Geopolitical Uncertainties Boost Gold Demand as a Safe Haven

Geopolitical uncertainties continue to significantly influence the demand for gold as a safe haven. Tensions in the Middle East and the ongoing conflict in Ukraine are prime examples. These events create a backdrop of instability, prompting investors to turn to gold to protect their wealth and thereby influencing its price.

Finance and Gold Price Volatility

Financial markets are poised to react strongly to the upcoming PCE data. An inflation rate higher than expected could lead to significant volatility in gold prices, as investors adjust their strategies based on the new economic information.

Experts Weigh in on PCE Data and Potential Rate Cuts

Jim Reid of Deutsche Bank predicts a slight increase in core PCE, which could lower the year-on-year rate to its lowest in over three years. Raphael Bostic, Atlanta Fed President, expects a rate cut in Q4, suggesting a potential series of cuts in 2025. Michelle Bowman, Fed Board of Governors, cautions that the Fed is not yet considering rate cuts.

Regional Factors Shaping Global Gold Demand

The global economic outlook remains mixed, with varying inflation and growth rates across regions influencing gold demand differently.

In the United States, potential volatility around the November election and the Federal Reserve’s interest rate decisions will be significant drivers of gold prices. These political and economic factors create an environment of uncertainty, which can lead to fluctuations in the demand for gold as investors seek safe havens.

In Asia, there is increased gold demand from central banks hedging against currency devaluation. This regional trend highlights the strategic importance of gold as a stable asset amidst economic uncertainties.

In Europe, economic stability and ongoing geopolitical tensions play a crucial role in shaping gold’s appeal. The region’s economic health and political landscape significantly influence investor sentiment towards gold. Understanding these regional dynamics is essential for comprehending the global factors that drive gold demand and influence its price movements.

Investors Prepare for Market Swings as Gold’s Long-Term Stability Shines

Gold prices are poised for potential volatility following the release of the PCE inflation data. While the long-term outlook remains positive, with gold benefiting from geopolitical uncertainties and a possible Fed rate cut, the immediate future may see fluctuations based on economic data and Fed commentary.

Investors should brace for potential market swings and consider the broader economic indicators and geopolitical events that could shape gold’s trajectory in the coming months. Despite short-term volatility, gold’s role as a stable, safe store of value continues to underpin its long-term attractiveness.

Dear Client,

To provide a more favorable trading environment for our clients, VT Markets will have leverage adjustment for certain products on July 29, 2024. Please check the details below:

The above data is for reference only, please refer to the MT5 platforms for the updated data.

Friendly reminders:
1. All product settings stay the same except for the leverage.
2. The margin requirement of the trade may be affected by this adjustment. Please make sure the funds in your account are sufficient to hold the position before this adjustment.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Exchange-traded funds (ETFs) have revolutionised the investment landscape, offering traders a versatile tool to access diverse markets. For traders, ETFs present an opportunity to implement sophisticated risk management strategies once reserved for institutional investors. This article explores how ETFs can be effectively used to manage risk in your trading portfolio.

Understanding ETFs and their risk profile

ETFs are investment funds traded on stock exchanges, much like individual stocks. They typically track an index, sector, commodity, or other assets, but can be bought and sold throughout the day like ordinary stock. Unlike mutual funds, ETFs offer greater flexibility and often come with lower fees.

While ETFs can mitigate some risks through diversification, they are not without their own set of risks. Market risk affects all investments, and ETFs are no exception. Tracking error, where an ETF’s performance deviates from its underlying index, is another consideration. Liquidity risk can also be a factor, especially for narrowly focused ETFs.

Diversification: The foundation of risk management

Diversification is a cornerstone of risk management, and ETFs excel at providing instant diversification. By investing in a single ETF, you can gain exposure to hundreds or even thousands of individual securities. This spreads risk across multiple companies, sectors, or even countries.

For maximum diversification, consider broad-market ETFs like those tracking the S&P 500 or total stock market indices. These provide exposure to a wide range of companies across various sectors, reducing the impact of poor performance from any single stock or industry.

Asset allocation with ETFs

Proper asset allocation is crucial for managing risk. ETFs make it easy to build a balanced portfolio across different asset classes. For example, you might use a combination of stock ETFs for growth, bond ETFs for stability, and commodity ETFs for inflation protection.

A simple yet effective allocation for a moderate-risk investor might look like:

– 60% in a total stock market ETF

– 30% in a broad bond market ETF

– 10% in a diversified commodity ETF

This allocation provides a mix of growth potential and stability, which can be easily adjusted based on your risk tolerance and investment goals.

Hedging strategies using ETFs

ETFs offer various hedging strategies to protect your portfolio during market downturns. Inverse ETFs, which move in the opposite direction of their underlying index, can be used to offset potential losses in your long positions. However, use these instruments cautiously, as they’re designed for short-term hedging and can be complex.

For example, consider an investor who holds $10,000 in an S&P 500 index ETF. If they’re concerned about a potential market downturn, they might hedge their position by investing $2,000 in an inverse S&P 500 ETF. If the S&P 500 falls by 5%, their main position would lose $500, but the inverse ETF would gain about $100 (5% of $2,000), reducing the overall loss to $400. This strategy can provide some protection against short-term market volatility.

It’s important to note that leveraged and inverse ETFs can be particularly risky and are generally not suitable for long-term, buy-and-hold investors. Always thoroughly understand these products before incorporating them into your strategy.

Managing sector-specific risks

Overexposure to specific sectors can increase portfolio risk. Sector ETFs allow you to balance your exposure or hedge against sector-specific risks. For instance, if you’re heavily invested in technology stocks, you might consider reducing risk by investing in a healthcare or utilities sector ETF.

Some traders use a sector rotation strategy, shifting investments between different sector ETFs based on the economic cycle. While this can be effective, it requires careful analysis and timely execution.

International diversification with ETFs

Expanding your portfolio internationally can reduce country-specific risks and potentially enhance returns. ETFs make it easy to invest in foreign markets without the complexities of directly owning foreign stocks.

This approach provides exposure to various international markets, potentially reducing risk through geographical diversification. In 2017, when the S&P 500 returned about 21.8%, the MSCI Emerging Markets Index returned 37.3%, demonstrating how international exposure can sometimes outperform domestic markets.

You can use country-specific ETFs to target particular markets or opt for regional ETFs for broader exposure. When investing internationally, be aware of currency risks. Some ETFs hedge currency exposure, while others don’t, affecting your returns as exchange rates fluctuate.

Risk management through regular rebalancing

Regular rebalancing is essential to maintain your target asset allocation and manage risk. As different assets perform differently over time, your portfolio can drift from its original allocation, potentially increasing risk.

With ETFs, rebalancing is straightforward. Simply sell ETFs that have become overweighted in your portfolio and buy those that have become underweighted. The frequency of rebalancing depends on your strategy, but many investors rebalance annually or when their allocation drifts beyond predetermined thresholds.

Practical tips for ETF risk management

To effectively manage risk with ETFs:

1. Research thoroughly: Look at an ETF’s expense ratio, tracking error, and liquidity before investing.

2. Use stop-loss orders: These can limit potential losses by automatically selling if an ETF’s price falls below a specified level.

3. Monitor and adjust: Regularly review your portfolio and adjust your strategy as needed.

4. Stay informed: Keep up with market trends and economic news that might affect your ETF investments.

Remember, while ETFs can be powerful risk management tools, they don’t eliminate risk entirely. Always invest within your risk tolerance and consider consulting with a financial adviser for personalised advice.

For those looking to implement these strategies, platforms like VT Markets offer the ability to trade a wide range of ETFs, providing access to diverse markets and risk management tools.

Conclusion

ETFs offer non-professional traders a range of tools for managing risk. From providing easy diversification to enabling sophisticated hedging strategies, ETFs can help you build a resilient portfolio. By understanding how to effectively use ETFs for risk management, you can navigate market uncertainties with greater confidence. As you apply these strategies, remember that successful investing is a journey of continuous learning and adaptation.

Sydney, Australia, 24 July 2024 – VT Markets, an award-winning brokerage, announces the launch of its ‘Be a Trading Athlete’ campaign, an online trading competition hosted on the VT Markets App with a USD 14,000 prize pool. The competition runs from 24^th July to 12^th August 2024 and is open to all global users with a Live Account.

This large-scale global competition follows the success of VT Markets’ previous campaign, FIFA 2022, which saw overwhelming participation. The brokerage anticipates attracting up to 8,000 new users by the end of this season.

The competition is divided into four periods, each focusing on a different sport every five days: –

● Shooting: 24 July– 28 July 2024
● Swimming: 29 July – 2 August 2024
● Track and Field: 3 August – 7 August 2024
● Boxing: 8 August– 12 August 2024

Participants are required to complete tasks and earn tickets during each period, including trading, depositing, and checking-in, with up to 21 tasks per period. The top 20 participants with the most tickets will share the USD 14,000 prize pool at the end of each period.

“We are thrilled to bring this competition to our users worldwide during this spirited sports season”, says Kyzer Ong, App Campaign Manager of VT Markets. “As a growing international brand, we continually seek ways to foster inclusion and uphold our belief that trading can be easy. Our goal is to engage our clients through their shared interest in sports and inspire them to apply their competitive spirit to trading. This competition underscores values of resilience, strategy planning, and adaptability in uncertain times. Additionally, we are excited to introduce our highly anticipated Copy Trading feature in Q3 2024”.

The upcoming Copy Trading feature aims to empower investors on their financial journey by offering portfolio diversification. Traders can automatically replicate the portfolios of seasoned professionals and maintain an active portfolio passively, which is suitable for traders of all financial literacy levels.

To participate in the ‘Be a Trading Athlete’ competition, download the VT Markets App, register for a Live Account, and visit the Promotions Page to opt-in.

About VT Markets

VT Markets is a regulated multi-asset broker with a presence in over 160 countries. To date, it has won numerous international accolades including Best Customer Service and Fastest Growing Broker.

In line with its mission to make trading accessible to all, VT Markets currently offers unfettered access to over 1,000 financial instruments and a seamless trading experience via its award-winning mobile app.

For more information, please visit the official VT Markets website or email us at info@vtmarkets.com. Alternatively, follow VT Markets on Facebook, Instagram, or LinkedIn.

For media enquiries and sponsorship opportunities, please email media@vtmarkets.com.

Or contact

Dandelyn Koh
Global Brand & PR Lead
dandelyn.koh@vtmarkets.com

Brenda Wong
Assistant Manager, Global PR & Comms
brenda.wong@vtmarkets.com

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

2 AI stocks that benefited from the boom in AI as much as Nvidia

The biggest names in artificial intelligence (AI) are once again beating quarterly earnings expectations.
There isn’t a hotter investment trend on Wall Street that exemplifies the FOMO trade quite like artificial intelligence (AI).

And the biggest winner was Nvidia.

Previously, we did a market analysis when the stock price of Nvidia skyrocketed to a record $1,224.40, bringing the company to hit a $3.01 trillion market cap milestone.

You can read about it here: Nvidia soars to record highs, eyes top spot by market cap

Nvidia made a move that many investors were eagerly waiting for. The tech giant completed a 10-for-1 stock split, now trading for about $120 a share compared with more than $1200 last week.

Such growth has put Nvidia on track to become the second largest company in the world.

What’s all the hype about stock splits?

When a company announces a stock split, it typically indicates strong performance in earnings and share value. This suggests that Nvidia may continue to perform well. Management is confident that, following the split, the stock has the potential to climb even higher.

But don’t expect this superior pricing power to last much longer.

The reason AI stocks have soared is simple: AI is useful in almost every industry. With more companies making A100 and H100 chips and new competitors joining the AI data center market, powerful GPUs will become less scarce. This means Nvidia might not be able to charge as much for their chips in the near future.

Nvidia may be Wall Street’s hottest AI stock right now, but investors may be better off looking at companies which are not heading for a bubble-bursting event.

Picture: Nvidia trading at 136.26 as seen on the VT Markets app (As of 19 June 2024).

Here are 2 hypergrowth stocks that you should grab now

There are currently only three S&P 500 stocks in the $3 trillion club: Nvidia, Microsoft, and Apple.

Compared to the stocks already in the $3 trillion club, Alphabet trades at the lowest valuation by far at a wide discount when compared to the others. Given its current growth and future prospects, the Alphabet currently looks very undervalued.

Alphabet’s market cap now stands at $2.19 trillion, which is approximately 47.03% lower than Nvidia’s valuation of $3.22 trillion.

Here’s why Alphabet has what it takes to push its market cap above $3 trillion

Picture: Google currently trading between 180.72 to 182.48 as of 24 June on the VT Markets app.

While Nvidia dominates the hardware sire of AI, Google Cloud takes the leading role in AI software. Running AI models takes serious computing power, and many companies either don’t have it or can’t justify spending millions of dollars on a system that may not be used enough to justify its cost. Cloud computing is the answer to this problem, allowing anyone to rent computing space from a cloud computing provider like Google Cloud.

Whether it’s data storage or processing power, Google Cloud has clients covered. With access to the latest generation of Nvidia GPUs for training models, Google Cloud is a top competitor in this space.

Up next on the list: Intel

Picture: Intel trading between 31.14 to 31.47 as of 24 June. Download the VT Markets app now.

Intel has been slower in adopting AI, but it’s starting to stand out from other chip makers by jumping into manufacturing. They’re aiming to become one of the biggest semiconductor manufacturers in the U.S. and Europe, just as the demand for chips is booming.

This might be the perfect time to invest.

Intel is on the verge of a potential comeback. Last year, they announced a shift to a foundry model and plans to build chip plants all over the U.S.

Right now, Taiwan Semiconductor Manufacturing Company (TSMC) dominates the market, making at least 60% of the world’s chips. But with tensions rising between China and Taiwan, tech companies are rethinking their reliance on TSMC.

But not for Intel. They’re seizing this opportunity to dive into the manufacturing game.

However, starting a foundry business incurs significant costs, which is why most companies prefer to outsource manufacturing. As a result, it will take time for Intel to recover its investment.

Interested to add Nvidia, Intel, or Intel to your portfolio? Try CFD Share Trading.

With the VT Markets app, you can do it with just a fraction of the trade value, while also being able to control larger positions. Unlike stocks, which require the full amount of the investment upfront, trading Share CFDs offers you the opportunity to gain access to global markets faster and at a lower cost.

Explore our list of US blue-chip shares here