Nasdaq couldn’t maintain the levels near the all-time high values printed in September as started to fall in yesterday’s trading. This supported gold yesterday during the London session but in the New York positive correlation between gold and stocks returned. There are some indications of buying coming into gold today but weakness in commodity currencies, such as AUDUSD and the dollar strength in general is a risk for the gold bulls. AUD is soft even though the employment numbers were somewhat better than expected. Weakness in the currency is related to the comments from RBA Lowe who said the bank might cut the rates to 0.1% and that there might be some further stimulus measures to come. This coincided with the risk-off sentiment triggered by the U.S. Treasury Secretary Steven Mnuchin who said that a stimulus deal is unlikely before the US Presidential election. The rise in Covid-19 cases is also playing a part. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

Gold attracted buyers yesterday at 1882.50 and rallied to 50% retracement level. Today buyers came in at 10 dollars higher than yesterday which suggests there is some belief in higher prices. IF the current consolidation continues and buyers are ready to defend 1902 support then price could rally to the next resistance around 1912, but with USD strength coming in this is a risky bet which we are interested in if we see further evidence for gold and EURUSD strength. For obvious reasons these assets are highly correlated and if the USD strength continues it’s going to be more difficult for gold to move higher. At the time of writing this gold is holding up relatively well, suggesting gold traders anticipate either that the dollar strength is not going to continue or that the risk-off sentiment in stocks will divert funds into gold. As we have mixed signals in the markets it makes sense to be a bit more selective and careful with out trades. For more analysis on this and other markets, go to tiomarkets.com/analysis and don’t forget to subscribe to TIOmarkets YouTube channel.

Technology index Nasdaq created a short-term top and started to trade below it in yesterday’s day session in the US. Now the price is moving lower with no immediate support below. We are looking for short signals below 11950 with T1 area at 11614 to 11703 and should the price violate the rising trendline, then the less probable T2 area at 11420 to 11520 could come into play. This area coincides with the 50% retracement level. Alternatively, should the price violate 12026 resistance and move above it, the idea is negated and the consequent price action needs to be re-evaluated.

Recent macroeconomic data releases

  • US Unemployment Claims, 840K, 820K expected
  • Canada Employment Change, 378.2K, 150K expected
  • Canada Unemployment Rate, 9%, 9.8% expected.
  • UK Claimant Count Change, 28.1K, 39.5K expected
  • US CPI, 0.4%, 0.2% expected
  • US Core CPI, 0.4%, 0.2% expected

Macroeconomic data releases today

  • Australian Employment Change, -29.5K, -38K expected
  • Australian Unemployment Rate, 6.9%, 7.0% expected
  • EU Economic Summit
  • US Philly Fed Manufacturing Index, 14.4 expected
  • US Unemployment Claims, 810K expected
  • ECB President Lagarde’s Speech

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst
TIOmarkets.com

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Janne Muta
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