Gold has seen its quick rally of yesterday morning making a sharp stop in the hours following the ECB decision to keep rates unchanged. The spot price is now consolidating at $1,940/1,945, while we have a first support zone placed at $1,920 and a psychological threshold at $2,000. Technically we remain in the massive lateral trading range started in August between $1,860 and $2,070. A clear surpass of one of these last two levels could give a new directional impulse on gold.
Carlo Alberto De Casa – Chief analyst, ActivTrades
European benchmarks were little changed for the last trading session of the week as uncertainty continues. Although the ECB held its rates and provided investors with extended purchase programs (APP and PEPP) yesterday, no significant immediate impact has been recorded on stock prices as the move was already largely priced in. Christine Lagarde’s statement that the ECB will keep supporting the EU economy until inflation gets closer to its 2% target, is positive for investors.
However, traders will still have to deal with a highly volatile environment as valuation issues linger in some sectors. In addition as Europe becomes a virus hotspot again, there are concerns over renewed lockdowns measures that would severely impact demand in many market areas. Nonetheless, the fact most benchmarks still haven’t broken-out any major support levels indicates Bull traders are still present, which could mean that this week’s downward trends are corrective and not a reversal.
More volatility is expected today as traders cautiously await comments from some central bankers, as well as the US CPI release later in the afternoon. In the UK, the FTSE-100 index still benefits from Sterling’s drop due to frayed talks with the rest of the EU over the Internal Market Bill question.