GOLD
Gold prices edged up in early Friday trading, but the precious metal still looks poised to close the week with losses. After touching an all-time high in mid-July, gold accumulated losses as traders' bias towards the dollar increased due to uncertainty over the outcome of the US presidential elections and the economy's resilience. Donald Trump is the favourite to win the November election, and his presidency would entail more protectionism and could cause setbacks in the fight against inflation, hinting at the possibility of higher rates. At the same time, yesterday's reading of US GDP surprised to the upside, raising questions over the likelihood of a Fed rate cut in September. Against this background, today's release of PCE data, the Fed's favorite inflation measure, could add clarity to the dollar trade and its respective impact on gold prices. A reading confirming further price decreases would drive dollar softness and support gold prices, while a surprise to the upside would have the opposite effect.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stocks edged slightly higher for the last trading session of the week in Europe, paring some of yesterday's losses ahead of critical macro data in the US. In a break from the negative market sentiment of recent days, the corrective moves are primarily due to short-sellers buying back some of their position following the global rout seen this week on equity markets.
With a lack of significant changes in market drivers, we see today's slight rebound as a technical price action rather than something bigger and more directional. In addition, investors may want to rebalance their portfolios ahead of the crucial US PCE index, the Fed's favourite gauge, due later this afternoon. Today's reading is expected to be challenging to assess as traders and analysts anticipate a decrease from 2.6% to 2.5% on a YoY basis but an increase from 0.1% to 0.2% MoM.
Softer figures than expected should bring significant change to the current cautious market sentiment, supporting the case for lower rates in the world's largest economy, which could drive stock markets higher. Meanwhile, the STOXX-50 index challenges its first short-term resistance around 4,830pts following a rebound over the 4,800pts zone, led by Healthcare and Energy shares.
Source: ActivTrader
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