GOLD
Gold prices hedged up as the European trading session got underway, remaining very close to the seven-month maximums touched on Monday. The price of the precious metal is finding support due to the weakening of the US dollar in relation to other major currencies. Despite the continuation of a hawkish posture from senior officials, expectations over what the Federal Reserve will do next have been shifting. Many investors now predict the slowing down of the central bank’s rate hiking cycle. The narrative is shifting, from a focus on inflation to worries about a recession, and the Fed is expected to adopt a more dovish stance in order to soften the incoming economic contraction. Jerome Powell’s speech later in the day may, or may not provide further clues. In any case, the markets now appear convinced that the reign of the king dollar is over, a scenario that creates scope for further greenback depreciation and upside for gold prices.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European markets opened mostly in the green on Tuesday, despite Asian shares closing mixed overnight, while US benchmarks also point to an uneven open. Risk appetite seems to have a taken a short-term break as many investors seek more clarity about how far central banks will go with their monetary tightening cycle.
The recent hawkish wording from the Fed is pressuring market sentiment in the very short term, and an increased market volatility is likely in the afternoon with another speech from Jerome Powell due. Hopes of a quick end or pivot in the current hawkish monetary policies that many started pricing-in from November are fading after Fed officials reaffirmed the possibility of refinancing rates sitting over the 5% mark over the long term, and this has led to a reduced appetite for stocks and a move to some profit-taking after a solid start to 2023.
That said, while investors will pay a close attention to today’s EIA Energy Outlook and US wholesale inventories, all eyes will be on Thursday’s new US inflation print as investors expect the report to provide them with more clues on the Fed’s next move. Meanwhile, the short-term bullish trend will stay alive as long as no major support zone are broken. The DAX-40 index registered one of the biggest moves, with the market trading around 14,750.0pts, stuck between the 14,670.0pts support level and the 14,7780.0pts immediate resistance (38.2% Fibonacci extension) inside a bullish channel.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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