Daily summary: Gold below $2000/oz as risk rally extends

• President Trump is looking to cut capital gains taxes
• Russia approved the world’s first Covid-19 vaccine
• S&P near its pre-pandemic high
• Gold tumbles nearly 4%

European indices finished today's session in green after recent data showed  that investor's morale in Germany rose to 16-year high in August, well above analysts' estimates. In addition, a fourth month of increase in China's vehicle sales boosted demand for auto stocks. Investors also welcomed news regarding world's first COVID-19 vaccine and hopes for additional stimulus in the US. DAX added 2.1%, CAC 40 jumped 2.4% and FTSE 100 finished 1.7% higher.

Meantime in the US, Dow Jones jumped above 28,000 for the first time since February and the S&P 500 is trading near its al-time high, following news that President Donald Trump was “very seriously” considering a capital gains tax cut.
Sentiment was also supported by hopes for more stimulus after the White House signaled readiness to resume negotiations  with Democrats on a coronavirus aid package, while Senate Majority Leader Mitch McConnell said he was hoping a deal could be reached this week. Also investors continue to monitor US-China tensions ahead of Phase 1 trade deal review which will take place on 15th August. Meanwhile, Nasdaq is trading lower for the 3rd  session in a row as major tech stocks struggle to move higher.

 

Spot gold plunged nearly 4% to around $1,945 an ounce on Tuesday, set for the largest three-day drop since early March after reports that Russia has given regulatory approval for the world’s first Covid-19 vaccine after less than two months of testing on humans. Production may begin next month, with trials to be completed by January. It seems that a potential for a vaccine has been considered a bearish factor for the precious metals which are performing best in uncertain times. Silver fell over 7% to around $27.06 an ounce.

 

Oil prices rose today, WTI crude futures added 0.5%  and Brent rose 0.2% helped by expectations for new US stimulus and prospects of stronger demand in Asia. Saudi Aramco believes that fuel demand in Asia will increase as many countries gradually open their economies. Also weak US dollar and signs that the pandemic in some parts of the US is slowing also supported prices.

 

Economic calendar for Wednesday does not seem to be particularly interesting. GDP and manufacturing figures from the UK will be released during the European session while  US inflation data will be on watch during US trading hours. Apart from that, EIA Crude Oil Stocks report is expected to show a 3.1 mln decline.

WTI Oil  (OIL.WTI) – during today's session price bounced off the $43.00 resistance level which is additionally strengthened by 200 MA (green line) and is heading toward upward trendline. Should sellers manage to break below it, a new downward impulse toward $41.00 support could be launched. On the other hand, breaking above the aforementioned resistance may pave the way for a bigger upward move. Source:xStation5

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