Gold and Wall Street 30

The markets are gearing up for earnings season which starts today with reports from J.P. Morgan, Blackrock, First Republic Bank and Delta Airlines in the US. The focus is on financials this week with Wells Fargo, Bank of America, Citibank and Morgan Stanley reporting on Thursday and Goldman Sachs reporting on Friday. Today on the calendar US CPI is expected to remain at 0.3% while Core CPI is expected to increase to 0.2% from 0.1%. Later the FOMC Meeting Minutes will be released. Weakness was again present in US equities yesterday with a weak finish dragging prices lower. US FED Members were on the circuit again yesterday highlighting their willingness to taper next month. FED Member Bostic said that he was comfortable with the taper starting in November adding the sooner it begins the better. He said that underlying inflation was above the committee’s objective, the caveat is that severe and pervasive supply chain issues will probably last longer than initially expected. He said that inflation is likely to remain above 2% going forward. He said that pandemic induced price swings will eventually unwind by themselves without necessarily threatening longer term price stability. FED Member Clarida said that a gradual taper concluding in mid 2022 may soon be warranted with inflation risks on the upside. He added that the decision on the pace of asset purchases won't be intended to carry signal about timing of rate hikes. He said that the labour market has made notable progress and inflation is running well above what would be termed a moderate overshoot of the fed’s 2% goal. He added that the inflation increase is expected to be transitory. He cautioned that there is a flavour of stagflation right now due to the complications from the delta variant on the labour market and bottlenecks in the supply chain. FED Member Bullard said that he supports tapering in November with a finish in Q1 2022 in order to react to higher inflation, and wants to be in a position to raise rates in spring or summer 2022 if needed. He said that the economy is in great shape despite Q3 delta set back and employment should be back to pre-pandemic levels by springtime. He added that it was reasonable to think inflation could come down on its own, but there's some risk it could go higher. FED Member Barkin said that price rises are being driven by shortages. US Treasury Secretary Yellen said that she believes inflation is transitory and sees isolated shortages of goods in the months ahead. ZEW survey results came in much weaker than expected suggesting a fall in sentiment in Europe due to supply chain issues and energy prices increases. The Japanese 225 closed lower by -0.32%. The Hang Seng is trading down -1.43% while the Shanghai Composite is trading up 0.54%. Gold is trading at 1762.00. USDJPY is trading at 113.500.

On the calendar today, Eurozone Industrial production is expected to fall to -1.8% from 1.5%. US CPI is expected to remain at 0.3%. G20 meetings are taking place today and the FOMC Meeting Minutes will be released later in the day. FED Member Brainard is scheduled to speak in the evening.

Gold

The Gold chart shows that the commodity sold off below 1750.00 and found important support in the 1675.00 area in August. The price has once again moved under 1750.00 after a test on 1833.00 as resistance and is now testing the 1750.00 area as support. Resistance can now be seen around the 1781.00 area. The 1800.00 level may be resistive along with 1815.00 followed by 1825.00 and the 1833.00 area. Further resistance may be found at 1855.00 followed by 1900.00. The price may find resistance at 1907.00, 1915.00 and 1933.00/1935.00, followed by 1950.00. 

Support may be seen at the 1750.00 area with loss of the higher low from April at 1723.00 and 1700.00 may open the way to lower levels. A break of the 1670.00 area creates further bearish sentiment 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. 

Wall Street 30

The Wall Street 30 Index is trading at the 34350.00 area after making a new all time high in August at 35634.00 and selling off. Price moved lower since then but found support at 33500.00, 33615.00 and 33860.00. The 34000.00 area may be supportive in the short term along with the levels discussed above. These levels are then followed by the 33200.00 and 33000.00 areas of potential support. 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. 

The price action shows that the index has rallied significantly in recent months and price is still making lower lows while remaining supported. Resistance may be used at 34500.00 followed by 35000.00 and 35195.00. The 35300.00 area may be resistive in the short term. Resistance may emerge around 35450.00, 35500.00 or 35800.00 in the short term. The 35560.00 level is potentially resistive alongside the high at 35620.00. 

Philip Konchar

Core Spreads

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