From a chart analysis perspective, the price of gold seems to be drawing some of the most interesting setups. From the fundamental side, it may also look interesting, as the world is surrounded by rising inflation, the spectre of stagflation and the impact of the virus on the economy and the valuation of the US hike cycle.
On Thursday, gold seems to have rallied above $1,800 per ounce, after jumping nearly 1 percent during the previous session. The price rise may have been driven mainly by a weaker dollar. The US Dollar Index fell on Wednesday on renewed economic optimism and increased risk appetite, despite the spread of the Omicron strain. A South African study suggests a reduced risk of hospitalization and severe illness in people infected with the new variant. The U.S. Food and Drug Administration (FDA) also granted emergency approval Wednesday for Pfizer's Covid pill, the first oral antiviral drug approved during the pandemic. These events may have improved market sentiment, prompting investors to position themselves out of the safe-haven dollar into riskier assets. A weaker dollar, in turn, may make gold cheaper for buyers who hold non-U.S. currencies, which may increase its appeal.
Interesting developments also seem to be taking place in the oil market. WTI crude oil futures rose to more than $72.5 a barrel on Wednesday, after jumping more than 3.5 percent in the previous session under the influence of a larger-than-expected drop in U.S. crude inventories and the energy crisis in Europe. A slight improvement in risk appetite may have also contributed to the gains, as traders are more positive about the global economic recovery. The American Petroleum Institute reported Tuesday that crude oil inventories fell 3.67 million barrels last week above market expectations of a 2.633 million decline. At the same time, natural gas prices in Europe rose after Russia cut flows, forcing some countries to increase electricity imports and burn oil to meet demand.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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