The trading week started with an increased risk appetite and this is weighing down on the US dollar. The greenback’s safe haven status means it’s becoming less attractive to investors, amidst a new wave of optimism.
Despite the biggest daily global increase in new COVID-19 cases recorded on Sunday, investors appear to be shrugging aside any concerns, indicating that coexistence with the virus is becoming the new normal and focusing instead on the reopening of most economies after a damaging lockdown and the promise of a quick economic recovery.
Ricardo Evangelista – Senior Analyst, ActivTrades
The spot price of gold opened the new week above $1,750: for lovers of statistics this was the highest opening bell since November 2012. The price is now slightly declining against a recovery on stocks. Despite this, the main trend remains supportive and the price still tests the resistance area at $1,750-$1,760. In an uncertain scenario, traders often feel the need to increase the proportion of gold within their portfolio, using it as a hedge against a stock market correction.
Technically a clear breakup of the previous high in May would open space for a further rally, while on the other side the price is expected to find support firstly at $1,741 and later at $1,730.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Shares slid lower in Europe on Monday following a mixed trading session in Asia overnight after new virus cases were spotted in Australia, the US and Germany during the weekend. Market sentiment remains uncertain towards risk assets as coronavirus fears continue to grow while volumes keep on decreasing as more and more traders tend to get away from their desk during the summer season. In addition to fears of a second wave of the virus, market sentiment is also being weighed down by resurging tensions over Hong Kong after mainland China proposed a new law allowing its government to prosecute residents in the Special Administrative Region. It is still difficult to say whether the current consolidation will open the doors to a deeper market correction or whether it is just a pause before prices reach new highs. Technically speaking, bullish trends on most benchmarks remain valid so far and prices will continue to trade higher as long as no major support gets broken.
The Stoxx-50 Index still trades inside the lower part of its mid-term bullish channel with a support level at 3,195pts. Despite a recent failure below 3,285pts, the rising 34-day moving average combined with the lack of a bearish break-out on the RSI indicator increase the likelihood of the bullish trend continuing in the very short-term.