The German Ifo Business Climate survey is highly respected due to its large sample size and historic correlation with German and wider Eurozone econom
The German Ifo Business Climate survey is highly respected due to its large sample size and historic correlation with German and wider Eurozone economic conditions for the fact that it is a leading indicator of economic health. This indicator started improving in the first two months of this year as fears of more coronavirus restrictions cooled off after the omicron variant turned out to be pretty mild.
But, the conflict in Ukraine hurt the investor sentiment terribly in the Eurozone earlier this month. Although the tensions seem to have abated somewhat and the sentiment is not as bad at the moment, which has been giving support to risk assets such as stock markets.
Gold Daily Chart Analysis – The 20 SMA Held As Support
Gold resuming the bullish trend again as the uncertainty persists
Although, the uncertainty remains high. Prices of food and food products have been surging which keeps safe havens like GOLD in demand. Gold increased above $2,000 earlier this month when the tensions were at the peak, but then retreated lower below $1,900. The 20 daily SMA (gray) was pierced but it held as support for several days and eventually the price started bouncing off that moving average. Now, Gold is heading for $2,000 again.
Ifo Business Climate – 25 March 2022
- March Ifo business climate index 90.8 points vs 94.2 expected
- February business climate was 98.9 points; revised to 98.5
- Current conditions 97.0 points vs 96.5 expected
- February current conditions were 98.6 points
- Expectations 85.1 points vs 92.0 expected
- Prior expectations were 99.2 points
That’s a big slump as the Russia-Ukraine war dampens the outlook with surging inflation pressures also likely weighing on sentiment for the most part. The drop in the expectations reading sees that fall to the lowest since May 2020.
Remarks by Ifo economist, Klaus Wohlrabe
- Price expectations have risen, 2/3 of companies want to increase prices
- Price expectations have risen in retail as well
- Industry supply chain issues have worsened
- 80.2% of companies are facing such issues now as compared to 74.6% in February
- German economy faces uncertain times
That’s a damning sign of things to come in Germany as inflation grips the economy. The worst part is that things don’t look like they will turn out for the better in the months ahead. It is going to be a challenging Q2 for the euro area as consumers will surely start to feel the pinch of rising food and energy prices.
GOLD
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