Daily market commentary: Gold has fallen below $1,800


The US dollar is gaining ground to other major currencies during early Wednesday trading. The recent dollar strength results from the markets’ expectation of a strong rebound in economic activity in the US, sustained by President Biden’s fiscal stimulus program combined with the Fed’s accommodative monetary policy; a scenario that could lead to inflation rising above healthy levels for the first time in decades. The spectre of high inflation, although not more than a possibility at this stage, has been enough to decrease the appeal of treasuries, leading to a rise in yields and increasing demand for the greenback. Should today’s retail sales data figures come up positive, demand for the dollar is likely to increase further still.

Ricardo Evangelista – Senior Analyst, ActivTrades

daily market analysis


Gold has fallen below $1,800 with the price suffering as US yields surge to pre-crisis levels. Thanks to the economic stimulus doled out by the Federal Reserve, inflation could be back, as highlighted by James Bullard, a member of the FOMC. This could mean higher yields and a stronger US dollar, an unhelpful mix for further rallies of the world’s main safe haven. Technically the price has fallen below $1,800 and is now playing dangerously with the support zone of $1,785-$1,790. A clear fall below this threshold would denote further weakness and could push more traders to close their long position on the metal.

Carlo Alberto De Casa – Chief analyst, ActivTrades


European shares opened lower on Wednesday, extending the market pause from yesterday’s session. “Risk-on” sentiment is decreasing this week amid rising concerns that the sell-off on bond markets could dent the current rally on stocks. In addition, stretched market valuations in certain sectors are seen as warning signs that the stock market may be overheating after the buying euphoria earlier this month. Meanwhile, today’s session is likely to be focused on US data as both the minutes from the FOMC’s January meeting and retail sales figures are due later in the afternoon while investors will be waiting for another batch of corporate results with earnings from Kering, Capgemini and Beiersdorf. Technically speaking, the mid-term situation remains bullish as most EU benchmarks are still trading above significant support levels, safe from any corrective moves.

Pierre Veyret– Technical analyst, ActivTrades

Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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