Daily market commentary: The greenback’s recovery has curbed gold’s rebound


A series of medical setbacks in the fight against COVID is hindering risk appetite resulting in the continuation of dollar gains against the other major currencies for the second day in row. In a pattern observed since the beginning of the pandemic, demand for dollar-denominated assets increases whenever fear drives investors away from riskier instruments. However, the greenback’s gains are to some extent subdued and counterbalanced by optimism about the release of an economic stimulus package and the outcome of the American presidential election, with polls indicating an increasing likelihood of a Joe Biden victory by a clear margin, avoiding the nightmare scenario of a disputed result.

Ricardo Evangelista – Senior Analyst, ActivTrades

daily market analysis


The greenback’s recovery has curbed gold’s rebound. In fact, gold’s decline was even steeper proportionally than the dollar’s recovery, highlighting the difficulty for bullion to climb above and even to hold onto the key level of $1,920. This area, first reached in 2011 and now for almost a decade the record high for gold, is now the first real resistance for bullion. Moreover, we can also see that at $1,880-$1,885 buyers started to react and pulled the spot price back up to $1,890-$1,900. This is important as bullion, at least for the time being, didn’t fall to $1,850-$1,860, which is a major support to monitor. In other words, we are still in a wide lateral phase, in the trading range between $1,850 and $2,070. Bullion will need to break through $1,920 to have the chance to once again challenge the psychological threshold of $2,000.

Carlo Alberto De Casa – Chief analyst, ActivTrades


European markets had a mixed opening mixed on Wednesday after most benchmarks hit major support levels after yesterday’s downside moves. Market sentiment remains hesitant as most investors now seek further bullish catalysts before taking prices higher. Surprisingly, the FTSE-100 Index is one of today’s best performers with the index trading higher and evolving inside an encouraging technical configuration. The difficult negotiations between Boris Johnson and EU officials on the Brexit deal, and more specifically on fishing rights, had a significant negative impact on Sterling. However, this has also made the large companies of the FTSE-100 Index more competitive than ever on international markets and this has helped sustain investors ‘appetite.

From a technical point of view, the index is still trading inside a bearish flag pattern, challenging the 6,000pts level close to the upper band. However, the market hasn’t registered any new market low since its double rebound over 5,800pts while the Relative Strength Indicator has already broken-out of its bearish trendline as well as the key 50% level to tip the index into buy territory. Even if this is seen as a bullish situation, the price will have to clear the 6,080-6,120pts zone to unlock an extended bullish potential at first 6,170pts, then 6,300pts, then 6,420pts and ultimately 6,510pts. On the downside, the first available support is at 5,950pts on a short-term basis.

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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