European business climate rises

Germany’s Efo Business Climate Survey is highly regarded, as the large sample size and historical linkages make it an important indicator of the economic situation in Germany and the wider euro zone. This indicator has started to improve in the first two months of this year, due to the fact that the omicron variance has slowed down due to further corona virus restrictions.

However, earlier this month, the crisis in Ukraine severely hurt investors in the eurozone. However, the tension seems to have eased to some extent and the sentiment is not bad at the moment, and this has been supported by risky assets such as stock markets.

Gold Daily Chart Analysis – 20 SMA holds as support

 

As uncertainty continues, gold will continue its energy trend

However, uncertainty is still high. Prices for food and groceries have increased, which will provide safer shelters. Gold on demand. Earlier this month, when tensions were high, gold rose more than $ 2,000, but fell below $ 1,900. The 20-day SMA (gray) was pierced, but held for several days as support, and eventually, prices began to fall below average moving there. Now, gold is rising again to $ 2,000.

Efo Trade Climate – March 25, 2022

  • March Ifo Trade Climate Index 90.8 points vs 94.2 expected
  • February trading weather was 98.9 points; Upgraded to 98.5
  • The current situation is expected to be 97.0 points with 96.5
  • February’s average was 98.6 points
  • Expected 85.1 points vs 92.0 expected
  • The previous target was 99.2 points.

This is a great failure, as the Russian-Ukrainian war is weakening its outlook, and it is likely to be largely overshadowed by rising inflation. The expected decline is expected to fall to the lowest level since May 2020.

Opinion of Efo Economist Klaus Wohrabe

  • Prices have increased, 2/3 of companies want to increase prices
  • Retail expectations have increased.
  • Industry supply chain issues have worsened
  • 80.2% of companies now face similar issues, compared to 74.6% in February
  • The German economy is experiencing a period of uncertainty.

This is a sad sign of what is to come in Germany, as inflation is taking over the economy. The worst part is that things do not look good in the coming months. Q2 will be a challenge for the eurozone, as consumers may feel the pinch on rising food and energy prices.

Gold

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