Markets reverse Monday’s gains in early trade
European markets got the week off to a strong start but gains have already been reversed in early trade Tuesday. Wall Street is following suit after the long bank holiday weekend in the US and UK, eyeing a relatively unchanged open despite earlier gains.
The EU elections over the weekend produced a result that many expected, leaving markets free to focus on other matters. Brexit has become the boring unwanted guest at the party for many at this point and it seems investors are in agreement with last week’s events not having the impact they maybe once would have.
The US remains front and centre in most people’s eyes, with trade talks with China and now Japan taking centre stage. As one suffers a setback, Trump is keen to refocus the narrative on the other, talking up the prospects of an August deal with Japan, maybe even to their surprise. It would appear the President may well be acting with one eye on what is clearly a very sensitive market right now.
Gold looking vulnerable despite spike last week
Gold is quite steady at the start of the week after receiving a bump higher last week during a period of dollar weakness. Gold briefly popped above $1,300 a couple of weeks ago but that proved to be short-lived and once again the yellow metal is looking vulnerable. Ultimately, sentiment here is being driven by trade talks – and the impact on the greenback – and market risk appetite on the back of it.
The key levels remain in gold, with $1,270 looking very interesting to the downside and $1,300 the key level to the upside. The former looks more vulnerable at this stage, while a break of the latter would break a series of lower highs that could be indicative of a broader shift in sentiment in the market.
