Gold and Big Tech Stocks in Retreat
Precious metals quotes under pressure, gold loses more than 1%, profit taking on Big Tech stock
The second half of today’s session brings increased volatility on the dollar, which also translates into clear movements on precious metals. Gold and silver fared quite well today and were trading on the upside until 3pm BST. However, sentiment changed after the publication of the Bank of Canada’s surprise interest rate decision. The EURUSD pair turned back from its daily highs and precious metals moved lower.
It is worth noting that this is the second unexpected hike this week. The Bank of Australia also decided to raise interest rates at yesterday’s RBA meeting. These decisions were prompted by the latest macroeconomic data, which points to the need to further cool inflation.
In the US stock markets, we have seen a reduction in the recent upward momentum, primarily in the technology stocks that make up the NASDAQ. The sizable declines are mainly recorded by the largest companies. Alphabet (GOOGL.US) loses 3.3%, Microsoft (MSFT.US) over 2.7% and Amazon (AMZN.US) close to 3.4%.
On the other hand, investors’ attention is attracted by the huge disparity between the quotations of indices such as the S&P 500 (US500) and NASDAQ (US100) and the Russell 2000 (US2000) small-cap benchmark. As reported by Goldman Sachs bank’s trading desk, the record jump in call option ETF’s volume on the Russell index may indicate, a gaining ‘soft landing’ narrative, which may indicate a return of interest around previously underperforming smaller companies.
Looking technically at the chart of gold, the price has been moving in a downtrend since 4 May. At the beginning of June, the price reacted at the resistance height at $1981, but sellers failed to push the price to new lows and a correction was generated. The corrective movement was stopped today, however, at the height of the 100-period average at $1968, from where a dynamic retracement took place. If the current sentiment does not change, an attack on the recent minima at $1932 is not excluded.