GOLD
Gold prices softened in early Wednesday trading as traders closed winning positions after the record highs reached earlier in the week and ahead of the release of the Federal Reserve’s April FOMC minutes later today. Gold prices have an inverted correlation with the greenback and benefited from last week’s dollar depreciation, following what was perceived as a dovish intervention by the Fed’s Chairman at the end of the central bank’s meeting. However, since then, several senior Fed officials have reiterated the need to see inflation dropping further before rates start coming down. Against this background, gold traders will scrutinise the FOMC minutes for further clues on the likely path of the Fed’s monetary policy and its impact on bullion prices.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stock markets fell in Europe on Wednesday, with the UK’s FTSE-100 leading declines as investors were disappointed by the latest inflation print in the region. While the latest CPI report in the UK showed a sharp drop in price pressure, from 3.2% to 2.3% YoY, it didn’t match investors’ expectations (2.1%). This news significantly undermined hopes regarding the BoE’s ability to cut borrowing rates at the next MPC meeting, boosting the risk-off sentiment at the beginning of today’s trading session.
With dovish tones recently set out by both the ECB and the Fed, investors have been disappointed that the UK’s BoE may now delay the start of its easing monetary cycle after today’s data. Sterling is on the rise, putting pressure on the large exporting groups of the FTSE-100 index, with miners such as BP, Shell and Antofagasta as the worst performers so far.
Meanwhile, investors are bracing for potential volatility spikes coming from the other side of the Atlantic ocean as significant US data such as existing home sales, crude oil inventories and the minutes of the last FOMC meeting loom in the afternoon while chipmaker giant NVIDIA will publish its Q1 results after the closing bell. The FTSE-100 index still trades slightly above 8,380pts as bull traders attempt to defend this short-term support level, even if the market has already entered a consolidation phase following the invalidation of its mid-term bullish trend starting mid-April.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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