Gold and Wall Street 30

The US CPI data came in at 0.3% yesterday a decline from the 0.4% forecast and the 0.5% from last month. Core CPI fell to 0.1% from 0.3%. The release initially sent stocks higher in the US pre-market but once trading began in earnest, the selling took hold and remained dominant for most of the session. The Chinese Retail Sales data missed estimates to come in at 2.5% from 6.9% expected and 8.5% previously. Fixed Asset Investment fell to 8.9% from 9.1% expected and 10.3% previously. Chinese Industrial Production fell to 5.3% from 5.8% expected and 6.4% previously. Chinese markets are also focused on Evergrande which continued to plummet overnight and was halted after falling more than 20%. China told banks that Evergrande would not pay interest due on 20 September prompting fears of a default. Risks for smaller banks and the wider property market are mounting with no intervention as of yet from authorities. The developments are not helping global risk sentiment with a broad decline in asset prices. ECB Member Schnabel said yesterday that the ECB does not expect inflation to be persistently too high in the eurozone. Her colleague, Villeroy echoed her statement saying that the rise in inflation is temporary. The ECB decided to reduce asset purchases last week but branded the decision an adjustment to avoid calling it a taper. All in all there are significant headwinds for assets across the market landscape at present. The Japanese 225 closed lower by -0.52%. The Hang Seng is trading down -1.27% while the Shanghai Composite is trading down -0.18%. Gold is trading at 1800.00. USDJPY is trading at 109.500.

On the calendar today, Eurozone Industrial Production is expected to rise to 0.6% from -0.3%. US Empire State Manufacturing Index is expected to come in at 18.1 from 18.3 previously. Canadian CPI is expected to fall to 0.1% from 0.6%. US Industrial Production is expected to decline to 0.5% from 0.9%. US Crude Oil Inventories are forecast to fall to -3.6M from -1.5M.


The Gold chart shows that the commodity sold off below 1750.00 and found important support in the 1675.00 area last month. The price has recovered to test the 1833.00 area and is now consolidating around 1800.00. Resistance can now be seen around this 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. Resistance may also be seen at 1959.00 and 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. 

Price is consolidating around the 1800.00 area with support at 1780.00. Further support may be sued around 1750.00. A 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 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. 

Wall Street 30

The Wall Street 30 Index is trading at the 34615.00 area after making a new all-time high last month at 35634.00. Price moved lower since then but found support at 34559.00 and 34500.00. The 34350.00 area may be supportive followed by 34136.00. Support may be seen at 34000.00 and 33840.00. The 33700.00 and the 33500.00 levels may be used as support in the short term. These levels are 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 making higher lows. Resistance may be used at 35000.00 followed by 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. Buyers may target a breakout there to continue the bullish theme towards 35900.00 and 36060.00. These levels are part of the 36000.00 round number area with further levels of potential resistance at 36200.00 and 36380.00 leading into 36500.00. 

Philip Konchar

Core Spreads

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