DAX, Gold and Bitcoin forecast: Dollar falls, yields retreat as risk appetite returns

Markets went from risk off to risk on yesterday afternoon and we have since kicked on with some follow-up buying of stocks, gold and silver, while the dollar has also shown signs of weakness. Risk appetite turned positive after bond yields and oil prices both retreated yesterday. But after the turbulence of recent sessions, it is too early to assume the pressure has disappeared completely. Still, it is an encouraging sign, nonetheless. Gold’s sharp recovery from recent lows suggests a low might be in place. Bitcoin and the DAX have also formed interesting price action. Looking ahead, we have some UoM sentiment data from the US while Canada releases its monthly jobs report. Next week, the focus will turn to US inflation and central bank speeches.  

Before discussing the macro factors in greater detail, let’s have a quick look at the charts first.

Gold’s recovery points to potential bottom

Gold has surged higher after yields eased back. Persistent central bank demand in the physical form and ETF inflows by investors have provided support and cushioned the downside from a strong US dollar and rising yields recently. And now with the metal trying to break its bearish trend line, we could see some follow-up technical buying if the bulls succeed here. The metal has also defended a rather important level near $4100.