Good morning, traders.
On Wednesday, the primary focus will remain on the inflation reports which are coming out from the UK and Canada. Economists are expecting a slight improvement in inflation, but falling crude oil prices may impact the figures severely. Therefore, despite the positive forecast, we may see selling in the GBP and CAD today.
The office of Office for National Statistics will be releasing the UK’s inflation figures. British CPI fell sharply to 1.3% in January, precisely below the BOE’s target. Economists are expecting a slight rise in the inflation rate this month by 1.7%, so we may not see any changes from the BOE policy decision and tone. This can support the Sterling in the coming week.
Daily Gold Outlook
The safe haven metal prices hit a six-week high and are still struggling to rise further, mainly due to the markets crashing day by day in the wake of intensifying coronavirus fears. As of writing, gold is currently trading at 1,603.53 and consolidates in the range between the 1,599.61 – 1604.85. However, the yellow metal prices were recently boosted after a warning from Apple about lower production and demand in China.
Whereas Caixin increased uncertainties regarding the decreasing coronavirus infected people’s numbers on Tuesday, after the latest figures from Hubei, the epicenter of the deadly virus, showed a confused picture. According to the report, there are 1,693 new cases on February 18 against 1,807 of February 17. This report also suggests 132 new deaths compared to 93 recorded the previous day.
GOLD is higher by 5.7% so far this year because investors evaluate the impact of the disease on economic growth amid thinking that the Federal Reserve will feel increased pressure to deliver a rate cut.
On the positive front, the China earlier announced tariff cuts on 696 US goods which also plays in favor of the risk appetite. As a result, the market’s risk tone remains sluggish with the US 10-year treasury yields recovering to 1.564% from sub-1.56%, whereas S&P 500 Futures also followed suit with 0.13% gains to 3,375.
Looking forward, investors will keep their eyes on any headlines from China for taking fresh direction, whereas the US economic calendar can entertain momentum from traders afterward.
Daily Support and Resistance
Pivot Point 1597.25
The precious metal gold has violated the ascending triangle pattern, which was keeping the precious metal under pressure below 1,592. Since this level has already been violated, and gold has touched the 1,602 mark, we may now see the precious metal going after 1,611. The aggressive target for this week will be 1,632. The bullish bias remains solid.