GOLD
Gold prices remain solidly supported above $2,000, which became a significant support level since the second half of last week after the Federal Reserve meeting. The Fed surprised observers with a pronounced dovish stance, which ended up driving bets of at least three rate cuts next year, with the first one expected as soon as March. As a result, treasury yields fell, and the dollar weakened, enhancing the appeal of the non-yielding precious metal. Since then, several Fed officials have tried to reframe the bank’s message and talk down the markets’ enthusiasm, pointing to the resilience of the US economy as a reminder that, as the fight against inflation isn’t yet over, the central bank has scope to keep rates high for longer. However, unless there are significant upside surprises in the upcoming US economic data releases, which could reset investors’ rate expectations, gold prices look set to end the year on a high.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European benchmarks continued to trade sideways on Wednesday as market sentiment remains uncertain due to monetary policy expectations.
Investor appetite for risk continues to be torn between dovish expectations from the latest batch of reassuring macro data and warnings from central bankers.
Officials from the Fed and the ECB are on the same line, trying to temper investor expectations and stating there is no rush to cut borrowing rates, which prevents equity markets from registering new highs in Europe.
The situation is, however, not yet threatening for EU equities as the current setup provided by rising EU bonds and a lower Euro currency should prevent riskier assets from dipping much lower.
That said, sideways trading is likely to continue on EU stocks until a new catalyst in the shape of a significant macro development brings more directionality to those markets.
The STOXX-50 index still trades above the 4,520.0pts support area as the lateral consolidation continues.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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