GOLD
Gold prices rose in early Wednesday trading, supported by lower Treasury yields and a softer US dollar. Traders are now focused on the release of US inflation data later today. Analysts generally predict a slight decrease in the pace of rising consumer prices in the world’s largest economy. If confirmed, this outcome is unlikely to significantly impact the Fed’s expected monetary policy, with around 45 basis points of cuts already priced in. However, any significant deviation from the consensus, either below or above expectations, could lead to volatility in gold prices. A lower-than-expected inflation reading could further weaken the dollar, likely driving up the price of bullion, while a surprise increase in inflation would negatively impact the value of the precious metal.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stocks opened slightly lower in Europe on Wednesday, paring some of yesterday’s gains ahead of key inflation data from the biggest economy in the world. Traders are patiently waiting for today’s slew of major economic data, such as US retail sales, crude oil inventories and CPI.
Today’s inflation report is seen as crucial by most investors, as many wonder if today’s data will confirm hopes sparked by the latest US NFP report, and push the Fed to end its hawkish stance sooner than estimated. No change is expected regarding the monthly CPI data, however, the yearly figure is widely expected to display a price pressure slowdown from 3.5% to 3.4%.
If a bigger decrease were observed today, it would increase the likelihood of starting the Fed’s easing cycle, providing a fresh boost to equity markets while pressuring the US Dollar. On the other hand, a sticky or higher inflation rate than estimated would significantly dent the latest bullish appetite on stocks.
The STOXX-50 trades around 5,080pts following a failure to clear the psychological threshold of 5,100pts, led lower by the luxury sector, with LVMH, Kering and L’Oréal among the worst performers today.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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