Daily market commentary: Gold price climbing to its highest in seven years

Valentina Kirilova
May 18, 2020 10:38 am

FOREX

The Chinese yuan is losing ground to the US dollar, as the tension between the two countries once again rises to the top of traders’ agendas. The weekend was marked by the words of Peter Navarro, a White House trade advisor, who suggested that China had deliberately hidden the seriousness of coronavirus while at the same time ‘exporting’ it to the West. As the American presidential election campaign gathers pace it is likely that President Trump will explore tensions with China in an effort to galvanise his core support, with the yuan likely to remain under pressure as a result.

Ricardo Evangelista – Senior Analyst, ActivTrades

GOLD

Gold is skyrocketing with the price climbing to its highest in seven years. Dovish comments from the Federal Reserve and concerns about the stock market have lifted bullion. It is clear that investors are continuing to buy bullion as an insurance in case there are any further corrections on stocks. The general feeling of uncertainty and fears that stocks could be overpriced are encouraging traders to bet on further rallies for gold.

Technically the trend remains positive. The breakup of resistance at $1,730 was confirmed by both Friday’s close and in early trading of Monday morning, lifting the spot price up to $1,760.

Carlo Alberto De Casa – Chief analyst, ActivTrades

Daily Market analysis

EUROPEAN SHARES 

Shares traded higher from Tokyo to London on Monday as investors start the week on an optimistic note as major economies reopen. All European benchmarks registered a bullish opening with mining and energy shares among today’s top movers with market sentiment fuelled by fresh hopes of a global recovery.

However, even if the number of daily deaths from the virus is at its lowest since March in most of Europe, the lack of a proper cure and the difficulty in assessing the long-term economic damage caused by it means we’re not out of the woods yet and is likely to maintain pressure on stock prices in the medium term. This uncertainty is reflected in demand for safe havens, with the gold price hitting its highest in seven years, which clearly indicates investors are seeking to diversify their investments and hedge their mid to long-term bets on riskier assets like stocks in the case of a downside move later this week.

The DAX-30 Index is Europe’s top performer today, boosted by auto shares, as the price now challenges the double resistance at 10,770pts. A break-out of this level could take the market higher towards 10,980pts and 11,300pts by extension.

DAX-30 Index chart

Pierre Veyret– Technical analyst, ActivTrades

LeapRate Analyst

Experienced independent writer and journalist with a demonstrated history of working in the global online trading sector.
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