Gold prices rebounded from session lows closing up slightly on the session, after hitting a fresh 6-month low. The risk of a global trade war helped buoy gold prices. Target support on the yellow metal is seen near the December 2017 lows at 1,236. Resistance is seen near the 10-day moving average at 1,286. Momentum is negative as the MACD line recently generated a crossover sell signal. The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. Prices are oversold and could rebound as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 9, below the oversold trigger level which could foreshadow a correction.
ECB’s Villeroy warns of risk from a global trade war
ECB’s Villeroy warns of risk from a global trade war, which he said is no longer unthinkable. The French central bank head warned that central banks can’t fully offset uncertainty effects and that protectionism and Brexit may reverse the gains from globalization. At the same time, Villeroy said the ECB is more confident that inflation is heading in the right direction. The latter mirrors comments from Draghi last week when he announced the intention to phase out QE this year.
UK government borrowing declined in the last financial year to March 2018, by GBP 6.2 billion relative to the previous financial year, to GBP 39.5 billion. In the current financial year-to-date borrowing is down by GBP 4.1 billion less than at the same stage in the last financial year, while borrowing in May was the lowest for the month of May since 2005. As a percentage of GDP, government net debt stood at 75.8% as of the end of May, down 78.9% for the percentage as of the end of May 2009. Economic growth and rising tax revenues accounted for the declining borrowing. All data are net of lending to public sector banks which have been on the books since the financial crisis in 2008-09.