Gold and Wall Street 30

The markets consolidated their gains yesterday after bullish moves around the long weekend. Seasonal factors are helping stocks to move and stay higher and Friday’s strong NFP jobs report has given hope to the reopening of the economy narrative. Consumers are saving and spending their stimulus cheques in the US and it is expected that the economy will continue to show signs of recovery going forward. This factor is also producing rising prices and supply issues in many sectors leading to increases in inflation. A worrying report from the European Medicines Agency has been published and it states that there is likely a link between the AstraZeneca Covid-19 vaccine and blood clots. The EMA Safety Committee is meeting this week to determine whether it should discontinue use of the vaccine. So far they have stated that the benefits of the vaccine in preventing Covid-19 outweigh the risks. The report states that the cause of the blood clots remains unclear and the EMA are due to issue an updated recommendation on Friday. The AstraZeneca has been used widely in the UK and the EU and limiting or halting its further use may drastically slow the reopening of the European economy. Australian PM Scot Morrison has blamed the EU for its slow progress in vaccinating its population saying that “strict export controls” introduced by the EU has meant that they only received 700K of the 3.8M AstraZeneca vaccines it was contracted for. AstraZeneca has faced a number of production and supply issues, but the link to blood clots may scupper its participation in the global vaccine rollout.  The Japanese 225 closed higher by 0.12% today. The Hang Seng is trading down -0.6% and the Shanghai Composite is down -0.4%. Gold is trading at 1740.00 while USDJPY is trading at 109.890. 

On the calendar today, Eurozone Final Services PMI is expected to remain at 48.8. UK Final Services PMI is expected to remain at 56.8. US FOMC Members Evans and Barkin are due to speak today. US FOMC Meeting Minutes will be released this evening. 

Gold

The Gold chart shows that the commodity has consolidated in recent days. Following the breakout in January the price was pushed lower back under the trend line and is trading around 1740.00 once again after finding support at 1677.00 this month. The price is now trading well below the trend line after it failed to provide support on the breakout in January. Price moved up through and retested support at 1707.00/1700.00 and pushed higher. The 1750.00 and the 1763.00 area may act as resistance followed by 1775.0 and 1800.00. Resistance may appear around 1815.00 followed by 1825.00.  The 1840.00 level is where the trend line is positioned today, with more resistance at 1875.00 and the 1900.00 round number. Further resistance may be encountered at 1915.00 and 1933.00, followed by 1950.00. Resistance may also be seen at 1975.00. The 2000.00 level was used and may form as resistance ahead of 2015.00, followed by 2032.50 and 2065.00 incorporating the high at 2075.00. 

At present, the 1677.00 area is acting as support and potentially there is a double bottom pattern in play. A loss of the 1670.00 area negates the pattern and may provoke a test on 1650.00. The 1640.00 area has been used as support on the chart and is followed by the 1600.00 round number and 1567.50 higher low. A loss of the lower support at 1557.00, may allow a test on the next level of support around 1535.00. This is followed by the 1500.00 area. Below this, the new higher low at 1455.00 may be supportive and this is then followed by the 1400.00 area. A continued move to test the 1400.00 round number may indicate a more significant pullback to test the falling trend lines and open up the 1400.00 region. Price consolidated in this area with support at 1380.00 for much of last summer before breaking out. The 1360.00 area may also be used as support in the event of a deeper selloff. 

Wall Street 30 Index

The Wall Street 30 Index is trading above the 33000.00 area after running to all-time new highs this week. Price is currently trading at 33467.00 as it continues to push above the 33000.00 round number, and it is still creating higher lows and higher highs. Support may be seen at 32960.00, 32800.00, 32360.00 and 32150.00. The 32000.00 level may also be supportive followed by the 31730.00 area. The 31000.00 round number level is followed by potential support at 30615.00. The high in December reached 30425.00 and this may act as support ahead of 30000.00. A loss of the higher low at 29660.00 may lead to some selling pressure. The 29425.00 area has been used as a higher low after a bout of risk aversion this week. A loss of the 29000.00 round number opens up a potential test on 28160.00 and the 28000.00 round number. Below this, the 27783.00 level comes into play with further support around 27000.00 followed by 26541.00 and 26285.00. Below 26000.00, potential support may be found at 25850.00 and 25500.00. A loss of these levels may push price back towards the 25200.00 area followed by 25140.00 and 25000.00 levels. 

The price action shows that the index has rallied significantly in recent months and price is making new highs. Resistance may be seen at 33500.00 followed by the 33580.00 area. The 33610.00 level is potentially followed by 33730.00 and 33850.00. These levels are followed by the 34000.00 round number with further levels of potential resistance at 34250.00 and 34700.00 leading into 35000.00. 

Phillip Konchar

Core Spreads

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