Gold showing resilience despite Fed’s increasingly hawkish tone
As Friday’s session gets underway in Europe, gold is trading within the same narrow range as the last few days. The price of bullion showed some resilience this week, despite the Fed’s increasingly hawkish tone, revealed by the FOMC minutes published earlier in the week, which have propelled the US dollar to a 23-month high, with treasury yields also rising, in a dynamic that usually is negative for the non-yielding precious metal. However, the effect of the monetary policy of the Federal Reserve has, to some extent, been offset by the geopolitical risk generated by the war in Ukraine, as well as by worries related to rising inflation, two factors that support gold due to its roles as a safe-haven and inflation hedge.
Ricardo Evangelista – Senior Analyst, ActivTrades
European shares climbed on Friday, alongside US Futures contracts, paring some of Thursday’s losses as market sentiment improved for the last trading session of the week. All European benchmarks were in the green on Friday morning, with the best performances brought by Athens, Milan, and Paris, mostly due to energy shares as investors welcomed decreasing tensions and lower oil prices. Market sentiment is also finding support from Asia after the worrying virus resurgence in China sparked expectations of more dovish measures from the PBoC, to sustain its domestic economy. Meanwhile, investors are still digesting the latest move from the Federal Reserve. Even if most traders were reassured by the Fed’s roadmap to monetary tightening, they will be watching the effect on the economy’s performance, especially as geopolitical tensions in Ukraine are now expected to remain for a longer period. This clouds the environment further for investors, raising the prospect of more market volatility for the rest of 2022.
Pierre Veyret– Technical analyst, ActivTrades
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