US inflation and euro strength are in focus
Gold => The commodity falls towards $1920
Tesla => The stock rallied 8% this week
EUR/GBP => The pair trades above 0.85
Gold falls ahead of US inflation data, OPEC
Gold rose yesterday, snapping a 3-day losing streak, boosted by the falling US dollar, while the marked mood soured.
Optimism surrounding Russia-Ukraine peace talks faded after Russia said that the pledge to pull troops back from the capital Kyiv had not happened. Today, the precious metal is heading lower as attention shifts back to the economic calendar, the Organization of the Petroleum Exporting Countries (OPEC), and US inflation.
The core PCE index is the Fed’s preferred inflation gauge and is expected to show that inflation rose again in March. Hot inflation could encourage the Fed to hike rates at a faster pace, which could hurt demand for non-yielding gold. Meanwhile, OPEC+ is not expected to raise production, which could keep the oil market tight and the inflation hedge gold well supported.
| US ADP Employment report
US Core PCE |
Expected: 455k (20k)
Expected: 5.5% (0.3%) |
Previous: 475k
Previous: 5.2% |
Where next for Gold?
Gold has been trading relatively range-bound across the second half of March, capped on the upside by 1950 and on the lower side by 1908.
The price has shown a reluctance to move below here, most recently spiking lower and finding support on the 50 SMA. The long lower wick on the candle suggests that there wasn’t much acceptance for the price at the lower level.
The MACD hints towards further weakness and selling could pick up if it crosses the zero line.
Sellers could look for a move below 1908 to test the 50 SMA at 1891. A move below here could create a lower and see sellers gain momentum. A move above 1950 could open the door to 1971, the February 24 high ahead of the 2000 psychological level.
Tesla rallied 8% this week so far; here’s why
Tesla trades up 8% this week, marking its third straight week of gains, and is on track to rise 25% across March.
The Electric Vehicle (EV) maker jumped earlier in the week on news that it wants to split its stock, which doesn’t affect the value of investors’ holdings, but makes the share price more accessible for a broader range of investors because it is cheaper.
Tesla’s share price has managed to rebound despite the Ukraine crisis causing nickel shortages, a key component in the batteries since Russia is one of the world’s largest nickel producers.
Tesla, unlike its peers, has spent previous years focusing on how to secure its own nickel and vertical integration of the supply chain. This move is now being praised amid fears of supply shortages.
EUR/GBP rises to a 2022 high
EUR/GBP rose in the previous session for a third straight day in hopes of a diplomatic solution to the Ukraine crisis after Russia vowed to de-escalate hostilities around Kyiv.
The euro kept rising even when Russia denied that such a pledge was ever made. German inflation also jumped to an almost five-decade high.
Meanwhile, the pound came under pressure following cautious comments from BoE’s vice Governor Ben Broadbent.
Today, the pair is rising for a fourth straight day as expectations grow that the ECB will need to raise interest rates sooner. Attention turns to German retail sales, which are expected to slow, and UK GDP for Q4, the final reading.
| Ger. Inflation March YoY
Ger. Retail Sales MoM March |
Actual: 7.6% (2.1%)
Expected: 0.8% (1.2%) |
Previous: 5.5%
Previous: 2% |
Support can be found at 0.8470 (February high) and 0.84 (round number).
Resistance for the pair can be seen at 0.8550 (December 21 high) and 0.86 (December high)
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