The heightened concerns and mounting pessimism over the state of the global economy have soured risk appetite consequently encouraging risk averse investors to flock to safe haven assets such as Gold. This precious metal has enjoyed a four week bullish run amid the dwindling expectations that US rates may be hiked in March, while Dollar weakness continues to encourage bulls to propel prices higher. With risk aversion remaining rife and ongoing China woes complimented with the incessant declines in oil prices haunting investor attraction towards riskier assets, Gold may be set to appreciate to levels not seen since January 2015 at $1300.
From a technical standpoint, this metal is heavily bullish as there have been consistently higher highs and higher lows. Prices are trading above both the daily 20 and 50 SMA while the MACD has also crossed to the upside. A breakout above $1230 may encourage a further incline to the next relevant level based at $1260.
Stock markets under pressure
The ongoing wave of risk aversion combined with Janet Yellen’s cautionary stance towards future US rate hikes has crumbled confidence towards the global economy and this has consequently left stock markets heavily pressured during trading on Thursday. European stocks have sunk into the red territory surrendering previous gains as risk aversion extended through the financial markets amid the uncertainty over the state of the global economy. American equities may follow the same negative trajectory as Asia and Europe as investors flock to safe havens such as the JPY and Gold in a bid to attain protection. As long as falling oil prices and ongoing China woes continue to threaten investor confidence, the stock markets may be set for more painful declines moving forward.
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