Broker Arena

March 9, 2016

Rally in gold, stock, and oil price. Which one would hike?

Rally in gold, stock, and oil price. Which one would hike?

Europe GDP (YoY) has shown a 1.6% raise. This number is slightly higher than the forecasts of analysts which mentioned  that it would only reach 1.5%. However, this is not the only condition that it takes to stimulate the strengthening of Euro currency against the USD as other data would be needed such as inflation rate.

In the previous trade, S&P reached psychological level of 2002. This raise was supported by the simultaneous hike of WTI Crude Oil price these five days. However, profit taking and long term trend reversal should be anticipated for sure.

What would turn the US Stock Market trend around? Firstly, US stocks have risen considerably high since the Quantitative Easing was implemented and they also have taken the bubble burst risk high up there along with them. Secondly, interest rates hike rumor has also been spreaded lately which could lead to investors being not so eager to put their assets in the capital market. In such condition, they would tend to hold safe haven instruments, such as gold.

In January-March 2016, gold price has risen around 20%. This raise, however high it could be considered, still brings much more safety regarding asset placement than other instruments, such as stocks. It is also logical to hold it until The Fed provides certainty over this year’s rate hike.

A decline in EUR/USD could possibly occur as the resistance is being tested on 1.1080 level. As mentioned above, rate hike rumor could drive the EUR/USD to decline further.

 

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