Europe is the focus of investors’ attention today with the ECB meeting – where no interest movements are expected – and the press conference which will follow it. From there, investors will try to get any signal on the ECB’s next monetary policy and if the bank will try to mitigate against the euro’s strength. Indeed, in the last few weeks we have seen a remarkable recovery of the eurozone currency. Any dovish comments by Christine Lagarde will have a bearish impact on the euro, and this would once again be supportive for gold. Central banks’ activity and the hyper expensive monetary policies of the last few months have been one of the major market movers pulling up the gold price.
Technically, the main trend for bullion remains positive, while in the medium-term the price is in a lateral range between $1,860 and $2,070. We would have a first positive signal if bullion can recover the psychological threshold of $2,000, confirming the huge interest for this asset.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Stock markets opened mixed but steady this morning as traders now brace for today’s ECB meeting after a volatile trading week so far. The recent mounting bearish drivers on stocks (drying stimulus, US-Sino tensions, Brexit talks and valuation issues in the tech sector) have made the mid-term outlook much harder to predict for investors.
The strong market recovery seen between March and August is still on track but its pace is slowing as the euphoria is slowly being replaced by a more “cautious” trading stance from investors.
A change in rates is unlikely but a new set of stimulus measures is widely expected to be implemented before the end of the year after some EU officials warned the downside risks have intensified amid no significant change in output nor inflation since June’s meeting. Today’s press conference from Christine Lagarde will be crucial for investors as they desperately need further support from the ECB to continue taking stock prices higher.