ActivTrades’ Market Analysts prepared their daily commentary on traditional markets for February 27, 2020. This is not a trading advice. See details below:
The US dollar is losing ground to other major currencies due to investor anxiety over the coronavirus spreading into the United States. The first case of an infection not related to foreign travel, or contact with a known carrier of the disease, triggered fears that the virus is now present in the US and being spread within the community. Some observers mention the level of preparedness of the American government to deal with situation as being insufficient. At the same time, the likely economic impact of draconian disease containment measures in the country create greater scope for the Fed to cut interest rates, and this is why the greenback is likely to remain under pressure.
Ricardo Evangelista – Senior Analyst, ActivTrades
Gold is currently waiting for news about the coronavirus’ expansion across Europe and the US. Investors have taken up a position of risk aversion and giving a close read to the containment plans of governments and international agencies. This week, the yellow metal has managed to stop the sell-off just above last week’s close, after a strong rally to $1,689. The confirmation of this support indicates that sentiment towards gold is still positive and that the hypothesis of a long-term upward trend remains valid.
As the closing bell of Friday’s market approaches, tension in the markets will rise, with more investors deciding to close positions in the American futures and stock market as a form of protection against a possible worsening of the situation during the weekend. Gold can therefore once again experience a new rally at the market close, benefitting from the liquidity of investors moving their capital to safer assets such as gold and treasury bonds.
Andrés Gago-Núñez – Analyst, ActivTrades