Gold => The metal rises above $1840
DAX => The index rises to 14000
GBP/USD => The pair holds over 1.2450
Gold set for its first weekly gain in 5 weeks
Gold rallied 1.5% yesterday and has pushed above $1840, boosted by a combination of a weaker USD and safe-haven flows. The USD fell over 0.8% amid growing fears of a US economic slowdown, which could prevent the Fed from hiking interest rates as aggressively as initially expected. Weaker than expected initial jobless claims and a steep fall in the Philadelphia Fed manufacturing index, combined with disappointing corporate earnings, raised fears that the US economy was heading for a slowdown. Today, there is no high impacting US data, so market sentiment and the USD are likely to drive gold trading.
|U.S. jobless claims
US Philly Fed Index
|Actual: 218k (21k)
Actual: 2.6 (15)
Where next for Gold?
Gold has been trading in a falling channel since mid-April. The precious metal trended lower before running into support at 1887 mid-May. Gold extended the rebound from this support, retaking the key 200 DMA at 1838 and is testing resistance at the top of the falling channel. The bullish crossover on the MACD supports further upside. A breakout could see Gold test resistance at 1853 the January high ahead of 1869 the rising trendline support. A break above here opens the door to 1890, the March low. On the flip side, failure to maintain the 200 DMA could see the metal price fall back towards 1812, the mid-point in the falling channel, and yesterday’s low. It would take a move below 1786 to create a lower low,
DAX awaits PPI inflation data
The DAX fell 0.9% yesterday amid a broad selloff in the financial markets as inflation and recession fears grow. The IMF’s managing director Kristalina Georgieva warned that it is harder for central banks to decrease inflation without causing recessions. Today the index is rebounding despite losses on Wall Street, where stagflation fears dominated and after the PBoC cut the borrowing rate by more than expected. Attention is now turning to German wholesale inflation data, which is expected to rise to a record high, suggesting that consumer prices still have higher to run. Eurozone consumer confidence later in the session could also drive sentiment.
|Ger. PPI YoY April
EZ consumer confidence
|Expected: 31.5% (0.6%)
Expected: -21.5 (0.5)
GBP/USD looks to retail sales
GBP/USD rallied 1% in the previous session thanks to the weaker USD and amid hope that Rishi Sunak, the British Chancellor of the Exchequer, could cut taxes to help struggling businesses and or families as the cost-of-living crisis deepens. Today the pair is edging lower ahead of UK retail sales data. In March, retail sales unexpectedly slumped -1.4% MoM. The markets will be watching closely to see if that was the start of a new trend with consumers reining in their spending. The data comes following inflation data earlier in the week which showed that UK inflation rose to a 40-year high, and consumer confidence data overnight which showed morale was at its lowest level since the 1970s.
|UK retail sales||Expected: -0.2% (1.2%)||Previous: -1.4%|
Support can be found at 1.2220 (weekly low) and 1.2155 (2022 low).
Resistance for the pair can be seen at 1.2525 (weekly high) and 1.2635 (May high).