At March meeting, ECB cut deposit, refinancing and margin lending rates among other expanded asset purchases and long-term refinancing operation (TLTRO). Risk buying emerged in selected assets after the event, although heightened market volatility resulted in some contradicting moves. In its economic forecast, the bank foresees oil price to average $34.9 per barrel in 2017.
Both market fluctuation andeasing implications helped to boost gold price toward a resistance at $1275, just ahead of yearly high at 1307.6. These rate cuts in the Eurozone and Brexit woes in UK make the US the only country which may raise interest rate this year. Even so, potential delay is imminent given a lacklustre in US inflation and mixed jobs gains, thus market expects the Federal Reserve to hold rate at FOMC meeting next week. Gold gains solid support as a result of this situation.
Oil price and copper price also ticked up as part of a broad risk rally following ECB meeting and Draghi’s Q&A session. Although both growth and inflation expectation for the Eurozone were downgraded in the bank’s economic forecast, yesterday’s extensive package ticked all the boxes of a stimulation program. Asian equities and commodities reactive positively throughout today, including risk currencies like AUD.
GOLD TECHNICAL ANALYSIS – Gold price finally rose above 1275 past daily high although muted momentum may not provide enough lift to reach up to 1307.6 yearly high. Support on the downside has solidified after today’s event. From here the bet is about how high bullion can extend on the topside.
Daily Chart – Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper price mostly remained above support trend line, although intraday prices have skipped the support during last 4 sessions. Next week we may see a test of will between more sideways trading and the trend line. Weak momentum does not support a retracement to 2.3020 peak.
