The price of gold fell significantly last week thanks to a stronger dollar and rising stocks prices. The longs have pulled back for now, with the price going through a key support level. Investors might have a wait-and-see approach before entering the gold market. You can check the current gold rates in Dubai on business24-7.ae
A Stronger Dollar
The dollar index is at a 2-week high, and its strength has probably a profound impact on the gold price. The dollar moved higher with a Q4 GDP, kicking in at 2.2.%, while weekly jobless claims appeared to lower in the last week.
The dollar index had some strong gains in recent days. The central bank has discarded their plans to increase their rates this year, and the commentary looked to exceed even the most optimistic predictions. The dollar resurgence might be due to the uncertainty surrounding Brexit, the conclusion of the Mueller probe, and widening rate differentials.
The dollar index was as low as $95.2 but now sits at $97,2. If there is a further break above this price, we could see a new leg for the currency that could mean a downturn in gold and dollar-denominated asset classes. This would be a great option for forex traders to hit the market as these fluctuations usually make a good investment. The best option to go with is still IQ Option – you can read the IQ Option review by business24-7.ae
Stability and Risk
Stocks are evaluated slightly higher today as investors wait for the new economic information. The benchmark S&P 500 was above the 2800 level and could go a bit higher in the following sessions. Investors are most likely to wait for the trade deal with China and will also want to see the data that confirms the economy is not going into recession in the short term. Should there be weaknesses in the economic data or no U.S/China trade agreement, the following months could be all about risk aversion and stock decline.
The inverted yield curve got some attention recently and was the main reason for a major sell-off in stocks a week ago. An inverted curve, where short-term rates rise higher than long-term rates, could be a sign of recession. This is due to the investors going for longer-dated Treasuries and lowering the long-term rates. This inversion, however, doesn’t guarantee anything, and such a market state can be turned around quickly with the improved economic situation. It is still advisable to be careful as the Federal Reserve’s recent actions in combination with the inversion could mean a difficult period for stocks and the economy in the following months. Even though there was no large scale risk aversion yet, the economy and stocks look a bit more exposed, and if the recession becomes likely, we could see an equity sell-off.
Market Reaction
The gold market was significantly lower last week. Spot gold is at $2192,5. The market could stay range bound until there is more clarity on the pressing matters. The bulls will have to sustain the support around the $1280 area to avoid another drop in price. On the other side, the price should go above $1300 level, to get some upward momentum, and going above $1,320 would be a strong signal of strength. All the while, the market is likely to drift lower before receiving some aggressive trading action at around $1280-$1285.
