Gold blasts to new highs but can this joy last?

19 May, 2020

This market simply doesn’t add up. Investors are happy to add risk into portfolios with stocks and oil prices cheering this sentiment but at the same time, gold has reached its highest level since October 2012. This is not a relationship that we expect and it is unusual for there to be a limited discussion about it.

Warnings about the risk of a second wave of coronavirus disease infections, the long-term economic damage as well as the loss of economic productivity today is all music to the ears of Gold investors. But, investors are also very excited about vaccine hopes and economies reopening. For better or for worse, this element of risk sentiment questions whether the blast higher in Gold can be sustained.

While there are a lot of reasons for investors to stay positive on Gold, we would require a close above $1750 to receive further encouragement that this rally can last.

Although this rally for stronger risk appetite as well as oil prices suggests that commodity currencies would provide an interesting option to an investor’s portfolio at present. The Australian Dollar has surged by just above 100 pips today and the Daily chart suggests AUDUSD could attempt a further rally. If AUDUSD is able to break above 0.6569 it suggests that the pair will attempt to advance to levels not seen since the first half of March 2020.

The Canadian Dollar is another commodity currency that looks interesting. USDCAD is 120 pips away from the bottom of a range that has been in play for just over a month. Should USDCAD drop below 1.3848 the pair could attempt to recover losses in the Canadian Dollar that have transpired since the coronavirus was named as a global pandemic.


Source  
It's time for fiscal policymakers to deliver30 Jul, 2020  

The Fed's Chairman, Jerome Powell, did a credible job on Wednesday of keeping monetary policy unchanged, while still managing to meet markets expectations...

Bright prospects for the Euro23 Jul, 2020  

The initial mild reaction to the EU summit agreement has been taken over by the bulls as EUR/USD has surged to 21-month highs. Despite plenty of good...

Dollar to be depressed over rosier global economic outlook?16 Jul, 2020  

The Dollar will be on focus as investors digest a slew of fresh insights into the state of the global economy. The Dollar Index's (DXY) support level at 95.7 has...


Q2 set to end on risk-on note30 Jun, 2020  

Asian stocks are advancing on the final trading day of June, after a positive session on Wall Street, with market sentiment buoyed further by China's better-than-expected June PMI readings.

Beware Quadruple Witching: More volatility ahead?19 Jun, 2020  

Heightened volatility has been a staple of US equities since March, with the VIX index staying stubbornly higher compared to its long-term average of sub-20 levels...

Will the second wave of Covid-19 end the current rally?19 Jun, 2020  

It has been one hundred days since the WHO declared the coronavirus outbreak a pandemic. During this time, we experienced the worst sell-off and fastest...


To believe or not to believe in virus vaccine hopes?20 May, 2020  

The euphoria that roared across financial market sentiment throughout yesterday and encouraged huge rallies in major U.S stock markets is running thin on flames today...

Will the clock unveil more COVID-19 cases as restrictions ease?12 May, 2020  

Market volatility remains muted, however the crossroads appear to be getting closer where questions will be asked if eased restrictions are contributing...

Sell in May and go away?4 May, 2020  

On Covid-19 related news, states across the US are taking steps to restart the economy by easing stay-at- home orders and allowing non-essential businesses to reopen...