China keeps showing signs of positive economic outcome; the FED is in the spotlight as its latest interest rates start to produce their market impact. Recent interest rates advantageous for Gold
After a good closing on Friday, US stock indexes continued to improve as market interest rates (treasury bond yields) stabilized and declined. Due to a significant reversal in the recalibration of bets on interest rate hikes by the Federal Reserve, last week's sharp increases in these interest rates sent shockwaves among risky assets around the world.
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This near-term index strength is supported by the belief that the Fed's top rate may not be significantly higher than what the markets have already priced in. However, this cannot be confirmed before Friday's employment data and Fed Chairman Powell's double appearance before Congress. Expectations for the upcoming policy meeting at the end of this month are anticipated to be obtained from uncovered hints.
China's GDP predictions that were revealed yesterday also contributed to the market's improved risk appetite. Although they were somewhat less ambitious than previously anticipated, 5% growth is still a respectable number, particularly if, as the Chinese government has conveyed, they do so without increasing the public debt and while keeping inflation at 3%.
Monday's decline in market interest rates contributed to a narrowing of the interest rate gap between the dollar and the euro in favor of the single European currency.
Related Article: Macroeconomic indicators
Despite a significant decrease in eurozone retail sales, the EUR/USD pair climbed to levels near 1.07 yesterday. According to Lane, Governor of the Bank of Ireland and member of the governing council of the European Central Bank, the ECB will continue to raise interest rates beyond the 50 basis points projected for its March meeting.
After the correction in February, gold restarts its bullish trend due to the dollar's weakening and the decline in market interest rates. From a technical standpoint, it is progressing toward the objectives of 1864 and 1882.
Sources: Bloomberg, Reuters
