GOLD
Gold prices edged up during early Wednesday trading, defying the uncertainty surrounding the impending release of US inflation data later today. All eyes in the financial markets are fixed on the forthcoming publication of the March US Consumer Price Index figures, anticipated to reveal persistent inflationary pressures in the world's largest economy. Following last week's strong non-farm payrolls report, which underscored the resilience of the US economy, a robust inflation reading would further bolster the case for the Federal Reserve to prolong its high interest rate stance. Such an outcome could trigger an uptick in treasury yields and strengthen the dollar, potentially dampening the allure of gold; nevertheless, the precious metal continues to enjoy strong demand amidst geopolitical instability, uncertainties surrounding the global economic landscape, and substantial central bank acquisitions, factors that are likely to anchor bullion prices near current levels.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European stocks edged higher on Wednesday as bull traders defended support levels ahead of crucial US inflation data.
Market sentiment remains well-oriented, with the STOXX-50 index successfully rebounding over 5,000.0pts, a major short-term resistance level.
EU benchmarks were led higher by most sectors. Producer manufacturing, transportation and especially tech stocks have brought the best performances so far, thanks to a surge in sales registered by Taiwan Semiconductor Manufacturing Co, which gave a fresh boost to investors’ appetite around these assets.
Elsewhere, investors globally are waiting for the US inflation report, due later in the afternoon, impatient to see if today’s figures will confirm the “higher for longer” narrative.
The US Consumer Price Index is widely expected to rise 0.3% compared to last month and 3.4% compared to last year. Any figure below those thresholds could significantly revive hopes of dovish monetary moves from the Fed, boosting investors’ appetite for riskier assets.
That said, given the last round of sound economic data from the US, worse inflation figures than expected could dramatically affect market sentiment for equities, probably leading benchmarks into a much deeper correction.
This is not the scenario we currently observe on the STOXX-50 index as the market challenges the upper bound of its bearish flag following another rebound over the 5,000pts psychological zone. Still, we expect more volatility to find its way through the markets as we get closer to the US CPI data release.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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