Gold Price Stabilizes Ahead of FOMC Minutes | ThinkMarkets
As expected, the RBNZ raised rates by 75 basis points, taking its official policy rate from 3.5% to 4.25% (the highest level since early 2009). The central bank’s board of directors pointed out that the underlying inflation rate was very high and that the number of unemployed was beyond its sustainable level.
Eurozone manufacturing PMI flash data (November) released earlier at 47.3 is higher than expected at 46. Similarly, UK manufacturing PMI flash data (November) of 46.2 is higher than expected at 45.8.
Markets await US Durable Goods Orders numbers (October) at 5:30 p.m. UAE time, followed by US Manufacturing PMI flash data (October) at 6:45 p.m., then the US Consumer Confidence Index (October). Michigan at 7 p.m. Finally, investors will check out the FOMC minutes from the last Fed meeting at 11:00 p.m.
Indices and Bond Yields
Major U.S. indices stabilized as markets shrugged off social restrictions imposed in China due to rising COVID-19 cases and focused more on FOMC minutes. Investors are hoping for signals that the central bank’s tight monetary policy was dependent only on sharp increases in inflation.
US two-year yields at 4.50% remained higher than 10-year Treasury yields at 3.75%. A negative spread in favor of the yield of shorter bonds reflects an inversion of the yield curve and underlines that the US economy is heading into a recession.
Major FX Currencies
The price of the US dollar fell on stronger risk appetite following news of potential deregulation of the tech sector in China.
Technically, the dollar is moving in the area between 105.42 and 108.11. A daily close above the high of this zone could encourage traders to push the price towards 109.42, while a daily close below 105.42 opens the door for traders to head towards 103.83.
EUR/USD stabilized above 1.0200 as the euro benefited from stronger than expected manufacturing PMI data with stronger risk appetite.
Technically, EUR/USD may revisit 1.0111 while below the head and shoulders neck line at 1.0340 (developed on the four-hour chart). On the other hand, a daily close above 1.0415 may encourage traders to rally the price towards 1.0503 and 1.0559 respectively.
The price of gold stabilized on a weaker US dollar. It should be noted that gold traders will be waiting for today’s release of the FOMC minutes to act on it.
Technically, the price of gold may fall around 1720 as it sits below the neckline of the head and shoulders pattern at 1755 (expanded on the four-hour chart). On the other hand, a daily close above 1747 can send the price even higher towards 1765.
Oil traders await possible approval of European plan to impose a price cap on Russian oil (possibly between 65 and 70 USD) while Russia has replied that it will not sell oil to any country participating in this plan . It should be noted that the crude rate fell below pre-Russian-Ukrainian war price levels due to a possible global recession combined with concerns about an easing demand outlook from China.
Technically, it should be noted that the price of WTI oil has closed above 79.82 several times and could head towards 85.15. That said, a daily close below 79.82 could encourage the bears to head towards 74.97
Chart of the Day: S&P 500 Daily Price Chart
Chart Source: ThinkTrader
October 21st SP500 price corrected higher and then started an uptrend creating higher highs with higher lows. Nevertheless, the ADX reading below 20 highlights weak bullish momentum.
Currently, the index is moving in the area between 3939 and 4139. The price has repeatedly bounced from the lower end of the mentioned area eyeing a test of the upper end of it. On the other hand, any daily close below the low end of this zone opens the door for further decline towards 3722. However, the support level at 3830 should be considered.
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