Gold retreated to $1795 per oz as investors liquidated their long gold holdings at the same time then they exited their risk positions. The simultaneous equity, gold sell-off in risk environment has become a usual behaviour and doesn’t dent the gold’s safe haven value in medium term. Hence, the overall outlook in gold remains bullish despite an undesired positive intraday correlation with equities.
The EURUSD rebounded lower after hitting 1.1370 on Thursday. Irish finance minister Paschal Donohoe has been assigned the role of the new president of the Eurogroup, as countries will continue negotiations on the 750-billion-euro fiscal package to tackle the worst economic recession that the union faces since the WW2. The delay in the European recovery fund approval would dent the euro advance, bringing forward the risk of a negative surprise which would dampen the Eurozone growth prospects and send the euro tumbling against its major counterparts. For now, the 1.12 should provide an intermediate support to the single currency versus the greenback. The key support to the EURUSD’s medium term positive trend stands at 1.1160, the major 38.2% Fibonacci retracement on April – June rebound.
Cable, on the other hand, clashed with solid offers before the 200-day moving average (1.2685), as medium-term sterling bulls blocked the way up and pulled the pair to 1.2580.
WTI crude slipped below the $40 mark as the Covid angst won over the recent optimism in equity markets. Prospects of slower recovery in oil demand combined with an ample global supply could encourage a deeper downside correction to $37/35 pb area.
