- Risk-aversion dominates the markets on Thursday.
- 10-year T-bond yield falls more than 1%.
- US Dollar Index retreats from 2-week highs.
The XAU/USD pair touched its lowest level in a week near $1303 earlier today but gained traction with the precious metal finding demand as a safe-haven in the risk-averse environment. As of writing, the pair was trading at $1310, adding 0.25% on the day.
Major European equity indexes on Thursday fell sharply after the ECB’s monthly bulleting and the BoE’s Quarterly Inflation Report revealed that both banks slashed their growth forecasts for 2019. Escalating fears over a global economic slowdown also weighed on the market sentiment and forced Wall Street to open deep in the negative territory. Furthermore, with T-bonds receiving strong demand as safer investment alternatives, their yields plummeted and capped the US Dollar Index’s gains. At the moment, the 10-year T-bond yield is down 1.4% on the day while the DXY, which advanced to 96.67 earlier today, is adding only 0.07% at 96.45.
Later in the session, the Fed will publish its December Consumer Credit Report, but it’s likely to be ignored by the participants. Meanwhile, Dallas Fed President today said that the slower global growth was a headwind to the U.S. and added that the economy was feeling the cumulative impact of the Fed’s rate hikes.
Technical levels to consider
The pair could face the first resistance $1312 (daily high) ahead of $1317 (Feb. 5 high) and $1326 (Jan. 31 high). On the downside, supports are located at $1303 (daily low), $1300 (psychological level/20-DMA) and $1288 (Jan. 17 low).
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