Market Analysis

The sell-off seen on the US Dollar is boosting gold recovery

FOREX

Risk appetite continues to be the dominating sentiment amongst investors during early Friday trading, despite an alarming rise in the number of new coronavirus infections, fatalities and hospitalizations in the US, with the Centers for Disease Control and Prevention director saying that the next three months will be very difficult. However, investors already appear to looking to a post-COVID future, where vaccines and fiscal stimulus packages will trigger an unprecedented rebound in economic activity. It’s this optimism that is offering support to the euro and other risk related currencies, while the safe-haven dollar continues to sink.

Ricardo Evangelista – Senior Analyst, ActivTrades

 

GOLD
The sell-off seen on the US Dollar is boosting gold recovery. Bullion is on a fractional gain today, but this week is on track for achieving a 3%+ recovery, while silver jumped by 7%.

It is not surprising to see bigger movements on silver, which traditionally behaves as gold’s younger and livelier brother, showing more significant jumps when the trend is bullish and stronger declines when markets are in red.

From a technical point of view, gold is getting closer to the resistance level of $1,850. This area, formerly a support zone, was broken for the strong risk-on scenario seen in the last few weeks. Now, investors are realizing, once again, that gold will remain crucial in the medium and long term, as central banks will be forced to continue to print money to sustain economies.

Carlo Alberto De Casa – Chief analyst, ActivTrades

 

EUROPEAN SHARES 

Global stocks held gains, from Asian shares to US futures, for the last trading session of the week as investors continue to push prices higher prior to a major data release later today. Market optimism boosted by hopes of an economic recovery driven by recent positive vaccine developments, continues to increase investors’ risk appetite. This current situation is delivering a significant boost to energy shares, as well as oil markets, after this sector was one of the most heavily impacted by the Covid-19 crisis. In addition to the bullish leverage of higher demand for those assets, yesterday’s OPEC+ deal has also given another boost to black gold related shares. Unsurprisingly, travel and leisure shares, such as airlines and cruise companies, are among the top performers today. However, Investors are likely to witness higher market volatility in the afternoon with key data release from the US, as the highly anticipated Non-Farm Payroll together with the unemployment rate for November are announced. The release could well lead to profit taking moves prior to the weekend.

Pierre Veyret– Technical analyst, ActivTrades

 

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