Risk haven assets soar on rising geopolitical risks
The price of gold rose to a seven-year high as the market reacted to growing global tensions. This is after the United States, Iran and Iraq escalated their rhetoric following the murder of an Iranian general. Iran and the US have warned against retaliation and counter-retaliations. Meanwhile, Trump has warned Iraq against expelling American troops in the country. There are other tensions too. France has warned the US against imposing new tariffs on goods from the country while North Korea has warned that it will restart the development of long-range missiles. All these risks have made investors move to the safe-haven, gold.
It was a sea of red in global stocks as traders continued to assess the current geopolitical risks. In China, the A50 and Hang Seng indices declined by 120 and 225 points respectively. In Japan, the Nikkei index declined by 450 points. In Europe, the DAX, CAC, and Stoxx 50 declined by 178, 56, and 38 points respectively. Meanwhile, in the United States, futures tied to the Dow, Nasdaq, and S&P declined by 150, 55, and 15 points respectively. Other than gold, other good performers were crude oil and the Swiss Franc. Brent, which is usually the global oil benchmark topped $70 a barrel. This was the highest level in three months.
The euro rose today as the market reacted to a series of positive data from Europe. In Germany, the composite PMI rose to 50.2 from the previous 49.4 while the services PMI rose to 52.9 from the previous 52.0. In the European Union, the services PMI rose to 52.8 from the previous 52.4 while the composite PMI rose from 50.6 to 50.9. Meanwhile, the producer price index (PPI), which is a good measure of inflation rose by 0.2% in November. This was a higher rate after the 0.1% increase in October. These numbers signal that the European economy may have bottomed after the sluggish growth that was experienced in 2019.
The XAU/USD pair rose to a high of 1588. This was the highest level in seven years. The price is above all the short, medium, and long-term moving averages. The price is also along the upper line of the Bollinger Bands while the RSI has moved to the overbought level. The momentum indicator has also risen sharply. The pair may continue to rise as tensions increase. This may see the price test at the 1,600-resistance level.
The XBR/USD pair rose today as traders continued to worry about trade. The pair rose to a high of 70.42, which was the highest level since September last year. The pair is slightly below the upper line of the Bollinger Bands. The Average True Range (ATR), which is a measure of volatility rose sharply while the Stochastic oscillator has remained above the overbought level. The pair may continue to rise as tensions rise.
The EUR/USD pair rose to a high of 1.1205. This was the highest level since Friday. On the hourly chart, the price is above the 61.8% Fibonacci Retracement level. The price has moved above the 14-day and 28-day moving averages while the RSI has moved to the overbought level of 70. The signal line of the MACD has also been rising. The pair may continue to go up in the American session as it attempts to retest the previous high of 1.1240