- Investors are set to build on gains and pick up the momentum from Wall Street
- Focus remin on protection, trade war and tariffs
- Weakness in dollar working for gold
The Euro is in the green territory so the European markets. Investors are set to build on gains and pick up the momentum from Wall Street. In simple terms, the optimism around the Italian government has brought the bulls back in the market. The FTSE MiB has been under tremendous selling pressure and when there is such a strong steep sell-off, opportunities represent themselves.
This doesn’t mean that the political situation over in Italy is smooth now. Of course not, it is only a siesta time. Investors have gone in wait and see more while bargain hunters want to jump on the bandwagon because prices are out of whack.
One can always hope that the Italian political situation would take a direction under which both parties; The Five Star Movement and The League can keep their differences to a level which can save the borrowing cost for the country – the bond yields, below the record levels.
Over in the US, investors have their focus on protection, trade war and tariffs. Speaking of tariffs, the deadline is looming under which the US has to decide about its waiver of steel and aluminium tariffs on the EU. It is more than likely that he will kick the can down the road because taking any aggressive measure right now will only elevate the tensions between the US and the EU. Perhaps, that may not be the best policy because the current relationship between the US and the EU is already being tested due to the ongoing sanctions situation in Iran.
The price territory is very familiar when it comes to the gold price, there seems to be no strong reason which can anchor the demand for the precious metal. The dollar index has given up some of its gains and this is working in favour of gold price. However, the upcoming inflation data remain a gauge of significant importance. Any uptick in US core PCE index would surely add fuel for the dollar rally as the bar is already set low. The forecast is for 0.1% while the previous reading was at 0.2%.
