GOLD
Gold prices dipped in early Monday trading as concerns abated over the potential escalation of military confrontations between Israel and Iran into a full-scale war, which could unsettle the regional and broader geopolitical and economic stability. The precious metal finds itself ensnared in a balancing act between the flight to safety on the one hand and the rise in treasury yields and a strengthening dollar on the other. Despite remaining near the recent all-time high reached last week, bolstered by heightened haven demand, the bullion price faced downward pressure this morning. With tensions in the Middle East showing signs of easing, the market's attention shifted towards assessing the resilience of the US economy and the persistent grip of inflation. As prospects for a near-term rate cut by the Federal Reserve diminish and optimism grows regarding the avoidance of an overt conflict between Israel and Iran, gold prices could be poised for a correction, as traders may start closing long positions and capitalizing on the profits accrued over the past month.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares started the week on a somewhat positive note as traders were reassured by the lack of military escalation in the Middle East; the focus now switches back to macro fundamentals and corporate results.
The caution brought by the recent batch of solid US data, the kick-off of the earnings season, and rising geopolitical tensions may change as investors brace for what could be a highly volatile week for riskier assets.
Investors and analysts see the US GDP and PCE data due later this week as crucial, following monetary uncertainties raised by the Fed's recent hawkish narrative.
Bull traders are desperate to see inflation getting tamed down to revive hopes of a dovish monetary switch in the US, and market sentiment should be significantly impacted this week if PCE data were to prove them right.
It will also be a very busy week for corporate results as investors brace for a huge batch of earnings reports from some of the biggest capitalizations in the US and the old continent.
The US tech sector will be in focus with reports from Tesla, Meta Platforms, Microsoft and Alphabet due this week, which should provide investors with a glimpse of what to expect from the rest of the magnificent seven.
In Europe, investors will be waiting for a huge batch of corporate results, from banking shares like Axa and BNP Paribas to the luxury sector with Kering, l'Oréal and Hermes.
These numerous reports from so many different directions may be difficult for investors to digest, which could cause short-term volatility spikes on benchmarks.
The STOXX-50 index is trading above 4,900 pts following a sharp rebound over 4,850 pts at the end of last week.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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