GOLD
Gold prices are trading flat as the European trading session gets underway. After the recent losses, price stabilisation is a welcome relief for bullion traders, eager to see volatility give way to a more stable and clear-headed market. With the unwinding of the yen carry trade slowing down and reduced panic over Friday’s disappointing US job numbers, there may be potential for a rebound in bullion prices. Following the emergency sale of gold to cover losses elsewhere, the settling dust will likely reveal a bearish Fed outlook, clearing the path for lower treasury yields and a softer dollar, alongside ongoing geopolitical uncertainty. Against this backdrop, the precious metal is expected to regain support and possibly revisit the all-time highs touched earlier in the summer.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares opened mostly higher on Wednesday following a strong trading session overnight in Asia, as rebounds continued globally in stocks. Calm and stability now prevail on global equity markets after the sharp sell-off seen on Monday. While investors are still cautious, the fact that EU benchmarks are holding their recent gains is perceived as a positive message.
The volatility spike registered earlier this week is increasingly being seen as a technical correction, led by a no-confidence vote from investors after the Fed failed to provide what the market wanted. Such a correction is not unusual during the traditionally low-volume summer period, especially after months of stability and low market volatility. This fact has led investors to buy the dip despite lingering short-term uncertainty.
All eyes are likely to be on the next batch of speeches from Fed officials, as well as macro data, in an attempt to get more clarity about the short- to mid-term outlook for markets and the US economy. Top movers can be found among EU financial shares, with UniCredit, BNP Paribas and Banco Santander registering the best performances so far. The STOXX-50 index still trades above its very short-term bullish trendline, with 4,640pts as the major resistance to break before unlocking an extended bullish potential.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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