Two trades to watch: CAC, Gold

Fiona Cincotta
By : ,  Market Analyst

CAC rises after Macron leads the polls

 

CAC is rising along with European peers despite Putin firing a warning shot to allies by test-firing an intercontinental ballistic missile with nuclear capabilities.

Macron performed well versus far-right nationalist Marine Le Pen in the French election debate ahead of Sunday’s vote.

Following the debate well, known pollster Elabe revealed that 59% of viewers were more convinced by Macron.

 Le Pen has fallen behind Macron in the polls, but millions of voters remain undecided.

Eurozone inflation data is due to reaffirm the preliminary 7.5% reading for March, and ECB’s Lagarde will speak later.

Learn more about the CAC

Where next for the CAC?

 

The CAC has rebounded off 6415, a key support, rising above the 50 SMA, which, combined with the move higher in the RSI, keeps buyers optimistic about further gains.

The falling trendline dating back to the start of the year presents itself as near-term resistance ahead of 6755, the April high. A move above here will expose the 100 sma at 6835. A move above here will create a higher high.

On the downside, near-term support can be seen at 6570 the 50 sma. A move below 6400 could create a lower low and see sellers gain traction.

CAC chart

 

Gold awaits Fed Powell

 

Gold rose 0.4% in the previous session after a weaker USD and the latest Russia war developments boosted the precious metal.

Today, gold is falling as treasury yields are rising again, and attention turns to a speech by Fed Powell later today.

The market is pricing in an 83% probability of a 0.5% rate hike by the Fed at the FOMC on May 17th.

A hawkish tone from Powell could lift this towards 100%, boosting the USD and pulling non-yielding gold lower.

However, the moderate rise in core inflation in the March CPI reading could keep Powell from any big commitments, which would support further upside for Gold.

Learn more about trading gold

Where next for Gold?

 

Gold has traded within a rising channel since the start of the month. More recently, the price broke out to the downside before finding support on the 100 SMA on the 4-hour chart.

The price attempted to rebound but struggled to break above the rising trendline support turned resistance.

Gold currently trade caught between the 100 SMA on the downside and the 50 sma on the upside, so traders might look for a break-out trade following Fed Powell’s speech.

A hawkish-sounding Powell could see sellers push below the 100 SMA at 1944, opening the door to support at 1916. A move below here could accelerate the selloff to the 1900 round number.

Meanwhile, a less hawkish-sounding Powell could boost Gold bulls above the 50 SMA at 1965 towards 1982 before bringing 2000 the psychological level into play.

Gold chart

 

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