Gold has seen significant pressure over the past 24 hours, as the bears look to gather momentum and find lower lows that have not been seen for almost six months. After a brief push for support at 1072 the market looked to be faltering with its downward momentum, as a result we saw pressure start to ease off and it looked like the market was going to turn upwards again, and this was just another double bottom. The movements however show the market is still not giving up on the idea that gold can go lower; after a strong spike today it has pushed all the way back down to support at 1082 and for the time being I would not be surprised to see volatility for gold as it looks to find direction.
The catalyst for all these gold movements has been the strengthening USD and also the supposed advent of a rise in US interest rates, which seems more likely than ever these days given the strong labour readings as of late. Pressure will now be on the core CPI reading due out on Wednesday which will send a strong signal for the possibility of an actual rate rise, as a strong reading here would buoy the markets in such a way that they would not only position themselves for a rise, but even possibly look to double down on such an event.
EURUSD traders also felt the heat of a strong USD as the Euro slid lower on the charts touching lows not seen since April. Many are still expecting this month to be the month of Draghi, where the expectation at present is that the ECB will look to stimulate the markets further and could possible drive the Euro to parity with the USD; something long thought not probable up until recently. With all this market movement the ECB has so far been trying to reassure markets ahead of further stimulus that there is no threat of any bubbles occurring given the amount of cheap money floating around.
Traders however, are never so certain, but they are certain on one thing and that is the weakening of the euro will likely lead to a strong push for support at 1.059, something that has not been since in some time. Further drops to 1.0495 are certainly possible and given the way fundamentals have been looking it's likely we could see some strong drops on the charts in the near future. The question is if the FED will come to the party as well which could lead to a big disparity between the USD and the Euro in the short term.
Lastly, oil markets which are one of my favourites have been moving quite nicely as the bears look to take a big swipe away at the value of a barrel of oil. Resistance is looking quite stern at 42.24 and many will be waiting to see if the recent buying of oil was traders looking to exit positions and start to build up for the long term hold again. It is however early days and oil continues to look sluggish from a fundamental perspective, so it will be interesting to see how it holds up technically. The dead cat bounce may be a factor here and many will be aware of this and even targeting lower support levels despite the recent buying pressure.
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