The new South African variant of the coronavirus is shaking the market. More importantly, it is not difficult due to the limited number of investors in the market, due the long Thanksgiving weekend in the United States. The Wall Street session will take place today, however it will end sooner.
Coronavirus is a threat to economic activity, which means that currently the market is not expecting strong interest rate increases compared to yesterday! On Thursday, Goldman Sachs expected three rate hikes in 2022. Now the situation is completely different:
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Open account Try demo Download mobile app Download mobile app- Market expectations regarding the first rate hike of 25 bp moved from July to September
- What's more, second rate hike expectations had been postponed to 2023!
The expectations of lower interest rates and the high probability that the tapering process will remain unchanged cause bond yields to decline. This, in turn, leads to a weakening of the dollar and a significant rebound of gold, the price of which bounced off major support.
The price of gold has rebounded from key support. In addition we probably witness the formation of a morning star pattern. Gold is currently testing the 38.2% Fibonacci retracement, but the key resistance is located around $ 1,833. Source: xStation5
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