Gold soared to $1944 an ounce, a record high, as capital continued pouring into the precious metal on the back of an uncertain appetite for risk and waning trust regarding the strength and the viability of gains in global equities. Low US yields remain supportive of a further attempt on the $2000 mark, even though the RSI index near 85% warns that the precious metal has been bought too fast in a too short period of time and a downside correction should be healthy at the current levels. There is a mounting risk of rapid profit taking and a sharp downside correction, provided the decent amount of long speculative positions in gold.
Oil remained little changed near $41 per barrel. The OPEC decision to start reversing the production cuts to 7.7 billion barrel per day starting from August weighs on investor sentiment and could send the price of a barrel below the $40 mark should the global risk appetite worsen.
In the FX, the US dollar fell to the lowest in a year. The Federal Reserve (Fed) meeting on Wednesday should bring no major changes to the actual monetary policy.
The EURUSD surged to 1.1725 on the back of a broadly softer US dollar. Solid expectation of European outperformance in post-Covid recovery, combined with the agreement on the 750-billion-euro historical fiscal aid package last week, fuels confidence in the single currency. The latest CFTC data confirmed investors increased their long speculative positions in euro last week. Given the overbought market conditions, the EURUSD could retrace a part of its recent gains, but price retreats could be interesting dip buying opportunities for the euro bulls betting on a further positive stretch in the single currency.
Cable surfed on the weak US dollar wave as well and extended gains to 1.2858. While the latest news gives little hope that the EU and Britain will reach a free-trade deal by the end of this year, investors seem willing to postpone their worries and to deal with no-deal Brexit risks after summer. The pound is set to extend gains toward the 1.30 mark against the greenback, but solid resistance will likely come in play near this level.
