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JUNE 14, 2024

RISE DUE TO OPTIMISM

Gold prices have increased and seem to be heading for their first weekly gain in four weeks due to the current speculation about a potential Federal Reserve interest rate cut. Following the latest inflation data, the probability of a U.S. interest rate cut in September has surged to 67%, backed by recent data showing stagnant consumer prices in May and a decline in producer prices. As a result, spot gold rose to $2,334.70 per ounce, marking a 1.4% increase, and has climbed 1.9% for the week. Furthermore, increased gold demand, driven by global uncertainty and steady central bank purchases, had led prices to hit a record high of $2,449.89 in May, and analysts believe that while there is a current consolidation phase in the gold market, robust demand will prevent a significant price drop. Moreover, it is worth noting that despite potential technical hurdles ahead, such as resistance at the $2,345 level, the physical gold market continues to be affected by subdued demand in India and diminishing premiums in China.

DEMAND PUSHED GAINS

Crude oil prices have been rising steadily this week, marking the strongest gains since April. Currently, the West Texas Intermediate July contract is at $78.93 per barrel, while the Brent August contract stands at $83.14 per barrel. In addition, gasoline and natural gas prices are also on the rise. Moreover, although there are still some geopolitical concerns, analysts remain optimistic about the market outlook, with expectations of increasing demand and tightening supply in the upcoming months. In fact, Deutsche Bank and Citigroup anticipate further price increases in the oil market, with Brent prices potentially reaching up to $90 per barrel later in the year.

CONFIDENCE IN BLOCKCHAIN

Venture capital firm Paradigm recently closed its third fund, with a substantial $850 million earmarked for investing in early-stage projects within the crypto space. The successful completion of this significant capital raise positions Paradigm as a major player in the industry, as one of the largest funding events in the history of crypto-focused funds. Founded in 2018 by Matt Huang and Fred Ehrsam, Paradigm’s commitment to the crypto sector is further solidified by this milestone. Their diverse portfolio includes notable investments in companies like Coinbase, Uniswap, and MakerDAO. The crypto and blockchain industries are experiencing a surge in venture capital investments, with a notable 29% increase in funding and a 68% rise in deal volume in the first quarter of 2024, as per data from Galaxy Research. This surge in interest and funding underscores the growing confidence and interest in these emerging technologies. Moreover, other venture capital firms like Pantera Capital are also gearing up to raise substantial funds to capitalize on the opportunities presented by blockchain assets, reflecting a positive outlook for the industry’s future.

AI-POWERED INCREASE

Shares of Adobe surged by 14% this morning as the company increased its annual revenue fìorecast due to growing customer interest in its AI-enhanced editing tools, including the Firefly image-generating software. This positive outlook reassured investors concerned about competition from AI startups. The company’s efforts in AI technology are showing promising results, prompting existing users to upgrade to higher-priced plans to access Firefly. In addition, analysts from RBC Capital noted that the availability of Firefly was driving increased user engagement. Furthermore, it is worth noting that despite a 23% decline in its share price this year, compared to the S&P 500 index’s 14% gain, at least six brokerages raised their price targets for Adobe stock, and if the recent gains hold throughout the day, Adobe could see a market value increase of about $30 billion. Moreover, the company also raised its fiscal 2024 revenue forecast to $21.45 billion, with strong second-quarter revenue primarily driven by its digital media business.

INTERNATIONAL NEWS

The yen experienced a decline, and Japanese sovereign bonds saw an increase after the Bank of Japan announced plans to reduce its debt purchases, and although the decision to maintain the benchmark rate was anticipated, the lack of specific guidance left traders uncertain about future policy actions. The yen initially fell by 0.8% to reach its lowest level in nearly seven weeks before recovering slightly to trade 0.1% lower against the dollar. At the same time, yields on 10-year bonds decreased by three basis points to 0.944%. Expectations for a rate hike by the Bank of Japan next month have diminished due to the uncertainty surrounding the reduction of bond purchases, and market participants are closely watching how the central bank handles this adjustment, with the potential for intervention to support the yen if it continues to weaken. Moreover, despite the yen’s weakness, the wide yield gap relative to the U.S. dollar may persist until the Federal Reserve implements interest rate cuts, which makes it challenging for the yen to strengthen significantly in the near term.

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