Market of the week:
Recent sell pressure has taken this precious metal down on inflation news that came out last week. It looks like investors don't know what to think about the market right now as inflation is said that levels will remain the same and interest rates will remain unchanged.
A week dollar means a strong equities market and a higher price of gold; however, the expectation of a flattening inflation curve sounds like good news for the USD which could spell upside for the dollar as demand rises. We believe this to be short term bullish sentiment on the dollar since these are only expectations regarding future inflation, and that the economy is performing increasingly well. Since USD is mainly used as a safe-haven currency, a bustling economy is not ideal for dollar bulls, but stock bulls.
Last week's COT numbers showed a slow in purchasing the dollar asset and was actually a decrease in long positions. Long positions on gold have remained flat for the past three weeks, but this recent dip and rise in the price of gold could be from big money selling a lot of contracts.
A false breakout lead to an immense sell-off on the gold chart above. Gold came down and touched underneath its 200 SMA on the 4H timeframe to hit support around $1,845 before bouncing hard to the upside. Heavy resistance sits above where price made a double top around $1,900. Price may consolidate around its 200 SMA for the time being until sentiment starts swinging one way or the other.
9/17/2021 Stocks are down -0.58% this morning after coming down to test a significant level of support once again. While stocks fall, the dollar rises in the anticipation of sooner-than-expected tapering by the Fed along with a hike in interest rates starting in 2022. Our outlook Other than September being one of the worst months […]
9/16/2021 The Euro-Dollar pair is down over 0.5% today after several days in the red. Today's speech by EU president Lagarde mentioned how the economic recovery had come quicker than expected six months ago. This was praised by the prompt vaccine distribution so citizens could get back to work. Across the pond, the US just […]
9/14/2021 This morning's report on CPI m/m and core CPI m/m came in at a lower percentage than expected which resulted in a falling dollar pre-New York session. The USD is now volatile under the uncertainty of potential tapering and rising rates while the equities market seems to be rising because of this. Our outlook […]
9/13/2021 Big money has been moving out of Australia's currency for nearly a month now which has been the biggest drop in long contracts in this amount of time year-to-date. Australia's dollar index (AXY) is up 0.06% at 73.61 on the day after rebounding from the lows around 71.19. Our outlook Australia's economy has surprised […]