S&P 500 Moves To Session Lows After Hawkish Comments From Fed Officials

Key Insights

  • Protests in China raised worries about additional supply chain disruptions. 
  • Hawkish comments from Fed’s Williams and Bullard put more pressure on S&P 500 and NASDAQ Composite. 
  • A move below 3960 will push S&P 500 towards the support at 3920.

Fed Speakers And Protests In China Hurt Market Sentiment

S&P 500 settled below the 4000 level as traders reacted to protests in China and hawkish comments from Fed officials.

China was shaken by protests after 10 people died in a fire in the Xinjiang province. Protesters believed that victims of the fire did not get timely help due to anti-coronavirus measures.

Markets fear that China’s zero-COVID policy and protests will put more pressure on the country’s economy and lead to additional supply chain issues. These fears pushed WTI oil towards yearly lows, although oil markets managed to rebound amid rumors about a potential production cut from OPEC+ on December 4.

Fed speakers put additional pressure on market sentiment. Fed’s Williams said that inflation remained too high and that unemployment rate may grow up to 5% at the end of 2023. He noted that Fed should continue to raise rates.

Williams has also said that the Fed may start to bring down interest rates in 2024, which was too hawkish for the market that hopes that Fed would start cutting rates in the second half of 2023.

Meanwhile, Fed’s Bullard said that markets were underestimating chances of higher interest rates. He noted that the rates should be raised to at least 5%.

Today’s pullback was led by tech stocks, which are sensitive to the changes in the market’s appetite for risk. Apple, Microsoft, and Meta were down by about 2% in today’s trading session.

S&P 500 Heads Towards The Support Level At 3960

S&P 500

S&P 500 is currently moving towards the support level at 3960. A move below this level will open the way to the test of the support at 3920. In case S&P 500 declines below 3920, it will head towards the next support at the 50 EMA at 3885.

On the upside, the previous support at 4000 will serve as the first resistance level for S&P 500. If S&P 500 manages to settle back above this level, it will head towards the next resistance level at 4015. A move above the resistance at 4015 will push S&P 500 towards the resistance at 4040.

For a look at all of today’s economic events, check out our economic calendar.

Major Cryptocurrencies Technical Analysis: BTC/USD Eyeing Lower While LTC/USD Is Poised to Climb

Charts: TradingView

BTC/USD:

Daily Timeframe

We have an interesting technical landscape to work with on bitcoin versus the US dollar (BTC/USD). Since November 2021, buyers have essentially been on the ropes, plummeting an eye-popping 78%. Also of technical relevance is price cementing itself under the 200-day simple moving average ($21,773) since the beginning of this year: another bearish trend signal. In addition to this, the 50-day simple moving average ($18,525) slipped under the 200-day SMA in mid-January, a signal often referred to as a Death Cross (indicating a longer-term downtrend is possibly in the offing [clearly correct in this case]).

Consequently, it is safe to say that this market is trending south, and selling rallies is likely to remain the dominant strategy for many BTC/USD traders and investors at the moment.

Since November 10, buyers and sellers have been squaring off around $15,523. As evident from the chart, this is a pattern profit objective derived from a bearish pennant formed in May, drawn from between $25,338 and $31,418. Overhead, resistance calls for attention at $18,099, followed by $20,000. Should the unit push through $15,523, as suggested by the underlying trend, $12,216 is a visible support, a 100% projection which represents an AB=CD bullish formation.

Also of note, between mid-June and mid-August, we welcomed a bearish flag pattern (extended from between $17.567 and $21,711), which recognises a pattern profit objective (green) as far south as $7,674.

Therefore, given the clear-cut downtrend, it should not surprise to see $15,523 cleared and perhaps a test of $12,216.

LTC/USD:

Daily Timeframe

Since LTC/USD pencilled in a bottom at $40.32 in mid-June, price has been slowly grinding higher. Last week, rallying 20.8%, the unit jumped to a high of $83.43, forging a fresh higher high and ultimately informing market participants that this market is in the phase of switching from a downtrend to an uptrend. This saw price puncture resistance at $73.64 which, as you can see, is now being retested as a support (in the shape of a Japanese hammer candlestick pattern at the time of writing).

Also in support of a possible trend reversal to the upside, we can see that the 50-day simple moving average ($59.51) has crossed above the 200-day simple moving average ($58.01). This, in the world of technical trading, is known as a Golden Cross: a signal designed to indicate potential for a longer-term uptrend (essentially showing that there is strength to the upside in this market at the moment, though do be aware that false signals are common in crossover scenarios).

Above current price, resistance is seen at $96.64, accompanied by a 61.8% Fibonacci ratio at $98.73 and a 50.00% retracement ratio at $97.15. This is closely followed by a Quasimodo resistance parked at $104.89. Back under current support, aside from the 200 and 50-day SMAs, throws light on support as far south as $48.47.

While we do have the relative strength index (RSI) chalking up negative divergence—telling traders and investors that this market is showing signs of a deceleration in upside momentum—technical evidence still favours buyers at this point. As a result, assuming a positive close off support at $73.64, buyers may step in and pull this market northbound towards resistance between $104.89 and $96.64.

XRP/USD:

Daily Timeframe.

While the overall direction for XRP/USD has been lower since September 2021, price action largely bottomed in mid-May of this year and has been directionless since. Support, as you can see, stepped in at $0.30341-0.32233, withstanding several downside attempts. Resistance is seen at $0.43444, joined by a 50.0% retracement at $0.43663. Above here, traders will be watching resistance coming in at $0.52762, while slipping below current support highlights Quasimodo support from $0.25554.

In terms of where we stand on the relative strength index (RSI), the indicator’s value is showing signs of levelling off at the underside of the 50.00 centreline and indicator trendline resistance, extended from the high 75.58.

With the above analysis, resistance from $0.43444 will likely be closely watched by sellers as a potential platform to work with if tested, targeting support from $0.30341-0.32233.

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Natural Gas Price Fundamental Daily Forecast – Lower as Updated Forecasts Predict Less Weather-Driven Demand

Natural gas futures are edging lower but off its intraday low late Monday after dropping more than 5% early in the session. Gains are being capped by forecasts for lower demand over the next two weeks than previously expected, near record output and ahead of the expiration of the front-month December contract.

At 18:22 GMT, February natural gas futures are trading $7.205, down $0.125 or -1.71%. This is up from an intraday low of $6.929. The United States Natural Gas Fund ETF (UNG) is at $21.93, down $0.77 or -3.39%.

EBW Predicts Less-Weather Driven Demand

Prices moved sharply lower on Monday from the opening as analysts pointed to updated forecasts that advertised markedly less-weather-driven demand compared to pre-Thanksgiving expectations.

The weaker weather-driven demand outlook has “set a decisively bearish tone heading into today’s December contract final settlement,” EBW Analytics Group analyst Eli Rubin told clients.

NatGasWeather Sees Warmer Trends for Early December

Weather models over the weekend extended warmer trends for the first week of December.

“However, much of the weather data favors a rather chilly U.S. pattern setting up Dec. 8-11,” a time frame where “colder trends were observed” in the latest model runs, the firm said.

However, it’s questionable whether traders will “actually believe a colder pattern will arrive” given the data “once suggested a rather cold U.S. pattern was coming” during the first week of December “only to have it reverse notably warmer,” NatGasWeather added.

Refinitiv Forecasts above Normal Heating Degree Days

Data provider Refinitiv forecasted 404 heating degree days (HDDs) over the next two weeks in the Lower 48 U.S. states. The normal is 362 HDDs for this time of year. HDDs, which are used to estimate demand to heat homes and businesses, measure the number of degrees a day’s average temperature is below 65F (18C).

Refinitiv Supply/Demand Stats

Refinitiv projected that average U.S. gas demand, including exports, would rise from 116 bcfd this week to 127.8 bcfd next week.

Refinitiv also said that average gas output in the Lower 48 states rose to 99.6 bcfd so far in November from record 99.4 bcfd in October.

Short-Term Outlook

The bias is expected to be to the downside this week until the December futures contract expires. Then prices could rebound. The catalyst behind any rally is likely to a national railway strike and the return to service by the Freeport LNG terminal that has been offline since June 8.

For a look at all of today’s economic events, check out our economic calendar.

WTI Oil Gains Ground After Testing Yearly Lows

Key Insights

  • WTI oil received support near $73.60 and moved towards the $77 level. 
  • Gold pulled back below $1750.
  • Copper found itself under pressure as traders bet that protests in China would hurt the economy. 

WTI Oil Rebounds As Traders Bet On Aggressive Production Cuts From OPEC+

WTI oil  tested lows near the $73.60 level as traders reacted to the protests in China, which were driven by strict anti-coronavirus measures.

However, oil prices managed to gain upside momentum and moved back towards the $77 level amid rumors that OPEC+ may decide to cut production aggressively at the next meeting on December 4.

Meanwhile, EU countries failed to reach consensus on the Russian oil price cap deal. Negotiations continue, and it remains to be seen whether EU officials will be able to strike a deal before December 5, when the EU embargo on Russian oil would be implemented.

Natural Gas Continues To Trade Above The $7.00 Level

Natural gas  is trading above the $7.00 level as traders wait for additional catalysts. The weather forecast points to moderate natural gas consumption in the near term, but there is no sell-off in natural gas markets.

Some traders continue to exit their positions after the recent rally, but demand for natural gas remains strong. Most likely, the market will need significant catalysts to gain additional momentum and move out of the current trading range.

Silver Retreats As Dollar Rebounds

Silver found itself under strong pressure today and moved below the $21.00 level. The strong rebound of the U.S. dollar served as a bearish catalyst for silver markets.

Silver

If silver settles below the $21.00 level, it will get to the test of the next support at $20.80. A successful test of this level will open the way to the test of the support at $20.60. In case silver declines below $20.60, it will head towards the support at $20.40.

On the upside, silver needs to climb back above $21.00 to have a chance to gain upside momentum in the near term. The next resistance level for silver is located at $21.25. If silver moves above this level, it will head towards the resistance at $21.60.

Other precious metals are also moving lower today. Gold pulled back towards the $1745 level, while palladium declined towards $1825. Platinum is trading near the $1000 level.

Copper Is Under Pressure Amid Protests In China

Copper moved below the $3.60 level as traders reacted to the protests in China, which is the world’s main consumer of copper. If China maintains its zero-COVID policy or protests get out of control, its economy will get hurt and demand for copper will drop. The events in China will likely serve as the key catalyst for copper markets in the upcoming days.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Rebounds From Session Lows

Key Insights

  • U.S. dollar managed to gain upside momentum after testing new lows. 
  • Christine Lagarde said she believed that inflation had not peaked. 
  • USD/JPY moved back above the 138.50 level after testing new lows. 

U.S. Dollar Moves Away From Session Lows As Demand For Safe-Haven Assets Increases

U.S. dollar rebounded from session lows as traders were ready to buy the American currency near multi-month lows.

Currently, the U.S. Dollar Index is trying to settle above the 106 level. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance at 106.40.

EUR/USD Pulls Back After An Unsuccessful Test Of The 1.0500 Level

EUR/USD faced resistance near the 1.0500 level and pulled back towards 1.0430. ECB President Christine Lagarde has recently said that she would be surprised if the Eurozone inflation peaked in October. This comment has not provided additional support to the European currency.

EUR/USD

The nearest resistance level for EUR/USD is located at 1.0440. In case EUR/USD manages to settle above this level, it will move towards the next resistance at 1.0480. A successful test of this level will open the way to the test of the resistance at 1.0500.

On the support side, EUR/USD needs to stay below 1.0440 to have a chance to gain downside momentum in the near term. The next support level for EUR/USD is located at 1.0400. In case EUR/USD declines below this level, it will move towards the support at 1.0360.

GBP/USD Faced Resistance Near 1.2100

GBP/USD  has recently made an attempt to settle above the 1.2100 level but lost momentum and pulled back towards the support at 1.2050.

Today, traders focused on the CBI Distributive Trades report, which declined from 18 in October to -19 in November, compared to analyst forecast of -7. The report highlighted the weakness in the retail sales segment.

USD/CAD Gains Ground As WTI Oil Tests New Lows

USD/CAD tried to settle above the resistance at 1.3470 as WTI oil tested new lows amid protests in China. The protests were triggered by strict COVID-related measures. Oil rebounded from session lows, and USD/CAD pulled back towards 1.3430.

Other commodity-related currencies have also found themselves under pressure today. AUD/USD declined towards the 0.6700, while NZD/USD pulled back towards 0.6200.

USD/JPY Moved Back Above The 138.50 Level

USD/JPY tested new lows at 137.50 but lost momentum and rebounded above the 138.50 level. The broad rebound of the U.S. dollar served as the key driver behind the move.

For a look at all of today’s economic events, check out our economic calendar.

If the Correction is Over, It Can Mean One Thing for the Gold Price

Magical 38.2%

In particular, the situation appears very interesting in the latter, so I’ll start with it.

We just saw a small attempt to break above the 38.2% Fibonacci retracement, and I doubt that this breakout will be confirmed. The “why” behind it is currently the most interesting analogy that we see on this market.

Please take a look at the areas marked with red rectangles. In all those cases, the S&P 500 index rallied on big volume at first, and then the volume declined over the course of a few weeks. And as that happened, the price approached its top.

All three previous important tops that we saw this year were accompanied by this indication.

We also see it right now.

Even more interestingly, the volume levels that have just been seen are similar to the ones that accompanied previous tops.

Consequently, it seems that the end of the rally is near. This is likely to have very bearish implications for junior mining stocks.

Let’s check what’s up with gold.

The yellow metal corrected 38.2% of its previous medium-term decline, and it declined once again. The moves that are smaller than 38.2% of the preceding move are generally viewed as “weak corrections,” indicating a market where the previous trend is very strong.

Gold Price Forecast – What’s Next?

As the correction appears to be over, the medium-term downtrend is now likely to resume. The RSI indicator clearly supports this outcome, as it just moved back below 70. When we previously saw similar signals, gold price usually plunged.

There’s one more thing that makes me predict that the gold price top is already in.

It’s gold’s link with the USD Index.

As you can see above, the USD Index just moved very close to its recent bottom. However, at the same time, gold and silver prices didn’t move back to their previous highs.

This kind of weak reaction to a factor that “should” move the market, indicates that the market really wants to move in the opposite direction.

In the current case, this indicates that gold wants to move lower.

Combining the above with the extremely negative correlation between gold and the USD Index (currently the 30-trading-day linear correlation coefficient is at -0.95, while -1 is the most negative that it could go), this indicates that when the USD Index rallies, gold would be likely to truly plunge – magnifying the U.S. dollar’s moves, but in the opposite direction.

All in all, the technical outlook for the precious metals sector appears to be very bearish for the coming weeks.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

S&P 500 Price Forecast – Stock Markets Look Skittish

US Stock Market Forecast Video for 29.11.22

S&P 500 Technical Analysis

The S&P 500 has fallen a bit during the trading session on Monday, as we continue to struggle with not only the 200-Day EMA, but also the major downtrend line that I have marked on the chart. It’s worth noting that we are hanging about the 4000 level, which is an area that people will think is important from a psychology standpoint.

Keep in mind that there are a lot of concerns about a recession and a lack of earnings, which is almost certainly going to be a major problem. If we break down below the 4000 level, we could see this market try to go back down to the 3900 level, an area that has previously been supported. Breaking down below there opens up the possibility of a move down to the 50-Day EMA, which is currently at the 3886 level. Anything below there could resume the longer-term downtrend with a bit of aggression.

On the other side of the equation, if we were to turn around and take off to the upside, meaning that we cleared the daily downtrend line on a daily candlestick, then it is possible that we could see this market try to go to the 4150 level, followed by the 4200 level. Nonetheless, I think the one thing you can probably count on is a lot of choppiness and noisy behavior, as we try to sort out where we are going for the rest of the year. Furthermore, there is a natural tendency to buy stocks at the end of the year by money managers in order to show clients that they are holding on to the correct assets. However, the Federal Reserve meeting in December is going to overshadow almost everything.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Forecast – Silver Bounces After an Initial Selloff

Silver Price Forecast Video for 29.11.22

Silver Markets Technical Analysis

Silver markets have initially pulled back a bit during the trading session on Monday, to reach down to the 200-Day EMA. The 200-Day EMA is an indicator that a lot of people will pay close attention to, so it’s not a huge surprise to see that it has offered support. Furthermore, the 200-Day EMA sits at the $21 level, which has a lot of psychology attached to it. It also has been previous resistance, so the fact that it offered support should be expected.

If we were to break down below the $21 level, then we could test the 50-Day EMA which is closer to the $20.27 level, which is also rising. On the upside, the $22 level could offer significant resistance, and if we were to break above the $22.50 level, then it’s very likely that we could see the silver market really take off to the upside, perhaps opening up the possibility of a move to the $25 level. At this point, I suspect that silver is going to remain very choppy, but one of the things that could cause a lot of problems is going to be a potential lack of industrial demand. Remember, this is an industrial metal, not just a precious metal.

Ultimately, you should also pay attention to the US dollar and yields in America, because they have a strong negative correlation to silver. With this being the case, I suspect that we’ve got some noise ahead of us, but once we break out of this consolidation it’s likely that we get a much bigger move. At this point, silver looks neutral but is trying to break out.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Continue to Break Down

Crude Oil Prices Forecast Video for 29.11.22

WTI Crude Oil Technical Analysis

The West Texas Intermediate Crude Oil market has fallen again during the trading session on Monday, as we have broken below the hammer from last week. This has negated a “double bottom” that was potentially set up. At this point, the market is likely to continue going lower due to the fact that we are in the midst of a “demand recession”, as the global economy slows down. Supply has been a bit of an issue, but at this point, it’s likely that we see crude oil continue to struggle. At this point, it’s probably easier to short oil on signs of exhaustion.

Brent Crude Oil Technical Analysis

Brent markets have also broken down to a fresh, new low, breaking below the $82.50 level, an area that was a potential “double bottom” just waiting to happen. Now that we are below the level, it opens up the possibility of a move much lower, with the $80 level perhaps offering a little bit of support between here and there. If we break down below the $80 level, then it’s likely that we could go to the $77.50 level.

Rallies at this point will more likely than not get sold into, because global demand is falling off of a cliff, and China continues to lock itself down, which of course is one of the largest consumers of crude oil in the world. As long as that’s an issue, it’s difficult to imagine how crude oil does fairly well. That doesn’t mean it’s going to zero, just that rallies look suspicious until we can get better signs in the economy, starting with transportation.

For a look at all of today’s economic events, check out our economic calendar.

Natural Gas Price Forecast – Natural Gas Markets Fall Hard

Natural Gas Price Forecast Video for 29.11.22

Natural Gas Technical Analysis

Natural gas markets have fallen hard to kick off the trading session on Monday, as milder temperatures in the United States are causing a bit of an issue. Furthermore, the market may have gotten way ahead of itself so it does make a certain amount of sense that we would have to have a correction. At this point, I anticipate that the 50-Day EMA just below could cause some support, right along with the 200-Day EMA. If that were to be the case, then a bounce could be forthcoming. Keep in mind that natural gas markets remain very volatile overall, as the situation in Europe becomes direr.

Ultimately, the volatility is probably going to get worse, not better. After all, the natural gas demand in Europe is going to be plenty strong, but they have major problems when it comes to supply, and of course, the entire situation only gets worse with Qatar signing a 27-year agreement with China. Another factor is going to be that the economy is slowing down, so that may bring down a bit of industrial demand, so as you can see, there are plenty of things throwing this market around at the same time, suggesting that choppy behavior is going to continue to be an issue.

Keep your position size reasonable regardless of what you do but it does look like this pullback will probably find buyers, and it’s possible that we could go looking to the shooting star above, which is essentially the $8.00 level. If we break above that, then we could get to the top of the overall range. On the other hand, if we break down below the 200-Day EMA, it’s possible that we could go looking to reach the $6.00 level in general.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast – Gold Markets Continue to Grind

Gold Price Predictions Video for 29.11.22

Gold Market Technical Analysis

Gold markets went back and forth during the course of the trading session on Monday, as we continue to hang around the $1750 level, an area that has been important a couple of times. Furthermore, we also have the 200-Day EMA sitting just above, offering a significant amount of resistance, and that tends to attract a lot of trading attention. Ultimately, gold markets will continue to be very noisy due to the fact that the 200-Day EMA comes into the picture and then of course we had the 50-Day EMA underneath. In other words, we are essentially squeezing in general.

This is a market that I think will continue to see a lot of volatility based upon concerns about interest rates around the world, and of course inflation. If we were to break out of these moving averages, then it could open up the possibility of a bigger move, perhaps to the $1800 level. Anything above the $1800 level could send this market much higher, perhaps all the way to the $2000 level.

On the other hand, if we were to turn on a breakdown below the 50-Day EMA, it would send gold markets plunging down to the $1680 level. The $1680 level is an area that had previously been resistant, so it should now be supported. If we were to break down below there, then the market could plunge down to the lows again. Keep in mind that the US dollar, interest rates in America, and interest rates, in general, have a negative correlation to gold over time. With this, I think we are rapidly approaching a major decision.

For a look at all of today’s economic events, check out our economic calendar.

Trade of the Week: Gold Waits For Fresh Fundamental Spark

A growing sense of anticipation ahead of the US jobs report along with other top-tier data this week added to the overall caution, leaving investors on edge. With a softer dollar adding to the mix, bulls were injected with enough confidence to challenge levels not seen since November 18.

Nevertheless, the precious metal remains in a wide range on the daily charts with support at $1735 and resistance at $1785. Over the past few weeks, gold has bounced within this range as bulls and bears engaged in a fierce tug of war.

However, with the fundamentals slowly tilting in favour of gold bulls – a solid breakout could be around the corner. Gold needs a fresh fundamental spark to get its gears moving and this could come in the form of speeches from Fed officials, geopolitical risks, or high-quality US economic data.

Before we thoroughly discuss what to expect from gold over the next few days, it is worth keeping in mind that gold is up roughly 8% this month. November will be the first positive month for the precious metal since March 2022! Looking at the technicals, bulls are certainly in the vicinity on the daily and weekly timeframe but things still look choppy on the monthly charts. If the developments and data over the next few days support gold bulls, this could set the tone for December.

The Low Down…

It has been a volatile year for gold.

After surging and peaking in March following Russia’s invasion of Ukraine, the precious metal found itself on a slippery decline as the Fed aggressively raised rates to tame inflation. Although gold is down roughly 4% year-to-date, this inflates to almost 15% when measured from the March 2022 high.

Could the precious metal be experiencing a change of fortune after being beaten black and blue for most of this year? Given how the Fed is expected to slow its pace of interest rate increases in the face of cooling inflation, this may lead to a weaker dollar and falling Treasury yields. This combination is nothing but good news for zero-yielding gold which will most likely shine in a low-interest rate environment.

The Week Ahead…

This could be a big week for gold due to the protests in China, speeches from Fed officials including Jerome Powell, and key US economic reports.

Bulls have already made a move on Monday thanks to geopolitical tensions and this momentum could roll over into the next trading session. It may be worth keeping an eye on speeches by New York Fed President John Williams, and St. Louis Fed President James Bullard. There is a lot going on mid-week with Fed Chair Jerome Powell under the spotlight.

He is expected to reinforce expectations over the central bank slowing its pace of interest rate increases from December. Such a development may lead to a weaker dollar and falling Treasury yields – resulting in a boost for gold prices. Investors will also be presented with the Fed Beige Book report and US 3Q GDP second estimate which could result in some additional dollar volatility, spilling over to gold.

Thursday sees the release of the US weekly initial jobless claims and most importantly PCE deflator. Much attention will be directed toward the PCE Core Deflator which is the Fed’s preferred measure of inflation. Any signs of cooling inflation will most likely fortify expectations around the Fed adopting a less aggressive approach toward rates.

It’s all about the US jobs report on Friday which could be the real market shaker. Markets expect the US economy to have created roughly 200,000 jobs in October while the jobless rate is expected to remain unchanged. A report that meets or prints below expectations may justify a change in the pace of the Fed’s policy tightening – ultimately supporting gold.

Time for Gold to Re-test $1800 and Beyond?

On the daily timeframe, gold prices are trading above the 50 and 100 SMA but below the 200 SMA. As identified earlier, support can be found at around $1735 and resistance at $1780. A solid breakout above $1780 could open the doors towards $1800, $1840, and $1858. Alternatively, a move back below $1735 could signal a selloff towards $1700, $1680, and $1665.

For more information visit FXTM.

S&P 500 Index Dragged Lower by Plunge in Oil Prices Amid China COVID Protests

The benchmark S&P 500 Index futures contract is under pressure early Monday as protests from China’s prolonged COVID restrictions offset the optimism fueled by expectations the Federal Reserve would step down its aggressive rate hike path.

At 13:45 GMT, the S&P 500 Index is trading 4003.00, down 29.50 or -0.73%. On Friday, the S&P 500 ETF Trust ETF (SPY) settled at 402.45, up $0.03 or +0.01%.

Over the weekend, hundreds of demonstrators and police clashed in Shanghai as protests over China’s stringent COVID restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country’s far west.

The wave of civil disobedience is unprecedented in mainland China since President Xi Jinping assumed power a decade ago, as frustration mounts over his signature zero-COVID policy nearly three years into the pandemic. The COVID measures are also exacting a heavy toll on the world’s second-largest economy, Reuters wrote.

Shares of companies with big production facilities in the country led premarket losses. Shares of Apple lost nearly 2% and Tesla declined 2.2% in premarket trading.

Energy Sector Weakens as Oil Erases 2022 Gains

The energy sector of the S&P 500 Index is under pressure in the premarket session Monday as oil prices plunged to their lowest level in a year, with investors assessing the potential effect of civil unrest in China on global growth and fuel demand.

The Energy Select Sector SPDR Fund ETF (XLE) is down more than 2% before the bell. The weakness is being generated by shares of Chevron and Exxon Mobil, which dipped 1.9% and 2.1% respectively. U.S. benchmark WTI crude oil, meanwhile, slip 3.1% to $73.90 per barrel.

The last time WTI traded lower at any point in trading was Dec. 27, 2021, when the price came down to $72.57.

Tech Sector Stocks Slide Led by Apple and Tesla

The technology sector of the benchmark index is being led lower by companies with exposure to China including Apple and Tesla, which are down 2%. Other tech shares, down at the start of this week’s broader market sell-off were Micron Technology, Nvidia and AMD, all fell more than 1%.

Looking Ahead…

In the last week of the month, investors will be watching more earnings reports. Intuit, Salesforce and Five Below are among companies scheduled to report earnings.

A slew of economic releases including personal consumption data and the Non-Farm Payrolls report for November are expected to give further information on the state of the economy.

Daily Forecast

Some investors will be bargain hunting on the cash market opening on Monday because they believe the protests in China will eventually subside with investors shifting their focus back to Fed policy expectations.

Last week, the S&P 500 Index was lifted by the minutes from the Fed’s November meeting which confirmed a likely shift in policy. The minutes signaled that the central bank would step down its aggressive rate hike path as inflation cools.

For a look at all of today’s economic events, check out our economic calendar.

USD/JPY Forecast – US Dollar Bounces From Trendline

USD/JPY Forecast Video for 29.11.22

US Dollar vs Japanese Yen Technical Analysis

The US dollar has bounced a bit from the uptrend line that we have been following for some time on Monday. Furthermore, we have tested the ¥137.50 level, which is an area that of course has been important once before. Looking at this chart, the question now will become whether or not this is a double bottom, or if it is a situation where we are trying to break down through the trendline.

We have seen some weakness in the US dollar as of late, but this week could change things completely. We have the core PCE figures coming out this week, which is the favored inflation measure of the Federal Reserve. This could obviously have a major influence on perception as to what the Fed may do going forward, so therefore you will need to be somewhat cautious. Beyond that, we also have the jobs number which obviously will have a major influence on the currency markets and the relationship of these 2 currencies as they are heavily influenced by interest rate differentials.

If we turn around and rally from here, the ¥140 level will be an area that a lot of people pay close attention to, as it is a large, round, psychologically significant figure. It also is an area where we have seen some action in the past so of course it’ll be interesting to see how this plays out. If we break down below the trendline, then the next area of major support will be at the 200-Day EMA which coincides quite nicely with the ¥135 level. Either way, we are on the precipice of making significant decisions in the future direction.

For a look at all of today’s economic events, check out our economic calendar.

GBP to USD Forecast – British Pound Chops Back and Forth to Kick Off the Week

GBP to USD Forecast Video for 29.11.22

British Pound vs US Dollar Technical Analysis

The British pound has gone back and forth during the course of trading on Monday, as we try to figure out what to do with the idea of the 200-Day EMA sitting right there. It is obviously an indicator that a lot of people pay attention to, so it’ll be interesting to see whether or not this is the end of the relief rally in the British pound, or if it’s going to end up being a more significant trend change. I think at this point a lot of people were going to be paying close attention to the 1.22 level, which is an area that is a large, round, psychologically significant figure, and also an area where we have seen a previous double top. In that scenario, things get quite interesting as we try to figure out what to do with ourselves.

If we break down below the 1.20 level, then I think it’s very likely that we pull back to the 1.18 level. The 1.18 level had seen a certain amount of support and resistance in the past, so I think that’s a little bit of a battleground setting up, although I don’t necessarily think that it is going to be a major one. Breaking down below there opens up the possibility of moving down to the 1.16 level, which is basically where the 50-Day EMA sets. After that, then you have the 1.15 level that obviously carries a lot of psychology attached to it.

For a look at all of today’s economic events, check out our economic calendar.

GBP/JPY Forecast – British Pound Bounces From 50-Day EMA

GBP/JPY Forecast Video for 29.11.22

British Pound vs Japanese Yen Technical Analysis

The British pound has fallen rather hard initially during the trading session on Monday but found enough support near the ¥166 level and the 50-Day EMA to turn things around and show signs of life again. By doing so, the market looks like it is trying to hang on, and perhaps continue the longer term uptrend. That being said, this market is very choppy to say the least and I think that will continue to be the case. Ultimately, this pair is highly sensitive to risk appetite, and as long as that is all over the place, it does make a certain amount of sense that we would see quite a bit of confusion.

Underneath the 50-Day EMA, I would anticipate that the ¥165 level should be significant support, while the ¥168.50 level should be significant resistance, at least based upon the recent trading action. To the upside, the ¥170 level is an area that a lot of people will be paying attention to, because if we can break above there it’s likely that we go back to the highs, and perhaps even break out from there.

Keep in mind that the Bank of Japan continues to buy unlimited bonds in order to practice yield curve control, something that is inherently bad for currency. Because of this, I do think that shorting this market is going to be very difficult, but you should keep in mind that the British pound has a lot of its own issues. With the British economy going into a two-year recession, the Bank of England will only be so aggressive when it comes to fighting inflation. In other words, expect messy trading with a slightly upward bias.

For a look at all of today’s economic events, check out our economic calendar.

NASDAQ Composite Futures Tumble on China COVID Concerns; Apple Under Pressure

Nasdaq Composite index futures are down in the pre-market session after gapping lower on the opening in response to protests in major Chinese cities against the country’s strict zero-COVID policy. The upheaval is reigniting concerns about economic growth in the world’s second largest economy. Meanwhile, shares of Apple are under pressure on a report of disruption in China production.

At 12:30 GMT, Nasdaq Composite Index futures are trading 11705.00, down 77.75 or -0.66%. On Friday, the Invesco QQQ Trust ETF (QQQ) settled at $286.83, down $1.99 or -0.69%. The drop in futures is likely to put pressure on the ETF after the cash market opening.

Daily NASDAQ Composite Index

China COVID-19 Protests Spread to Major Cities

Protests against China’s strict zero-COVID policy and restrictions on freedoms have spread to at least a dozen cities around the world in a show of solidarity with rare displays of defiance in China over the weekend, Reuters reported.

The protests on the mainland were triggered by a deadly fire in China’s Xinjiang region last week that killed 10 people who became trapped in their apartments, in disaster blamed in part on lockdown measures.

The strict policy has kept China’s death much lower than many other countries but it has come at a cost of long spells of confinement at home for many millions and damage to the world’s second-biggest economy.

Although there were no signs of new protests in Beijing or Shanghai on Monday, the curbs so far have led to concerns over China’s economic growth and its trickle-down effect on global companies, Reuters wrote.

Apple Inc Predicts iPhone Pro Production Shortfall

The trickle-down effect on global companies is already hitting Apple Inc. Shares of the communications giant are already down nearly 2% in the premarket following a Bloomberg report that unrest at the company’s biggest supplier could result in 6 million fewer iPhone Pro units for the year.

Foxconn’s flagship iPhone plant in China is set to see a further reduction in November shipments after the latest bout of worker unrest, a source with direct knowledge of the matter told Reuters.

The world’s largest Apple iPhone factory has been grabbling with strict COVID-19 restrictions that have fueled discontent among workers and disrupted production ahead of Christmas and January’s Lunar New Year holiday, as many workers were either put into isolation or fled the plant.

Daily Forecast

The unrest in China triggered an early sell-off in the technology-heavy Nasdaq Composite Index as investors moved into safe-haven assets like U.S. Treasury bonds.

But with no signs of new protests in Beijing or Shanghai on Monday, prices are starting to claw back earlier losses. However, prices could resume their slide later in the day if the protests escalate.

On the bullish side, if the protests subside then look for the Nasdaq Composite Index to turn higher for the session as traders shift their focus to the possibility of a slowdown in the size of future Federal Reserve rate hikes.

The Nasdaq was lifted last week in a move that should carryover this week by comments from Federal Reserve officials signaling that the central bank would step down its aggressive rate hike path as inflation cools. Minutes from the Fed’s November meeting confirmed the likely shift in policy.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Forecast – Euro Continues to Push Higher

EUR/USD Forecast Video for 29.11.22

Euro vs US Dollar Technical Analysis

The Euro has had a strong session on Monday, breaking above the previous high but pulling back slightly once he got there. At this point, traders are speculating on the idea that the ECB will be forced to raise rates even further, as inflation is a major problem in the European Union. Because of this, it’s very likely that we will see noisy behavior, but it also could turn around in a flash as this week will give us multiple things to think about when it comes to the US dollar.

Core PCE comes out this week, which is the favorite inflation metric that the Federal Reserve uses. Furthermore, the jobs number also comes out on Friday so that almost always has a major influence on where we go next. With this in mind, I believe that we have a situation where the Euro could continue to go higher and finally break to the upside for a more sustained and perhaps trend changing move, or we will pull back over the next couple of days.

It would make a certain amount of sense to consolidate around the 200-Day EMA, because a lot of technical traders will be paying close attention to it. That being said, moving averages are lagging indicators so you can only read so much into it. The market had recently gotten way ahead of itself, so now it will be interesting to see whether or not we get enough “risk on behavior” to send the Euro higher for a more sustained move. Quite frankly, the European Union is not kicking up economic numbers that would cause a lot of betting on the Euro, this is all about interest rates.

For a look at all of today’s economic events, check out our economic calendar.

AUDUSD Forecast – Australian Dollar Continues Consolidating

AUDUSD Forecast Video for 29.11.22

Australian Dollar vs US Dollar Technical Analysis

The Australian dollar has initially fallen during the trading session on Monday, to reach down to the 0.6670 level before bouncing a bit to show signs of life around the 0.67 handle. Ultimately, this is a market that is trying to figure out whether or not it is going to continue to consolidate, or if it is ready to make a bigger move.

Another thing that you need to keep in the back of your mind is that we are not only hanging around a large, round, psychologically significant figure in the form of 0.67, but we are also between the 50-Day EMA underneath, with the 200-Day EMA above.

Quite often, being between these 2 moving averages can cause quite a bit of noise. With that in mind, I think you have a situation where there will be a lot of choppiness, which does make quite a bit of sense considering that the core PCE numbers, which is the Federal Reserve members favorite inflation metric, and the jobs number both come out this week.

This suggests that there could be a lot of choppy and volatile behavior, as we try to determine what the next major move is going to be. Keep in mind that this is also through the backdrop of a lot of economic concerns. In this environment, you would have to assume that we could go in either direction rather quickly. I do believe that there are a lot of people out there trying to determine whether or not we go “risk on”, or if we start to sell off again. I think we have the potential to make a violent move this week, but the first couple of days might be a bit choppy.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Traders Have A Very Busy Week Ahead

Federal Reserve Next Moves and Wall Street Expectations

Bulls are feeling a little more confident in their belief that the US Federal Reserve is moving closer to ending its tightening program after “minutes” from the November policy meeting showed “most” Fed members favored slowing the pace of interest rate hikes “soon.” According to the minutes, some officials even warned that continued rapid monetary policy tightening increased the risk of instability or dislocations in the financial system.

Most on Wall Street expect the central bank will raise its benchmark rate by 50-basis points at its upcoming December 13-14 meeting following four consecutive 75-basis point hikes.

Bears maintain that the more important issue is how high rates will ultimately need to go and how long the Fed will hold them there, which is of course dependent on how fast inflation comes down.

The most important inflation updates this week will be the PCI Prices Index on Thursday and the November Employment Situation on Friday.

Investors are also anxious to hear Fed Chair Jerome Powell discuss the US economic outlook during an appearance at the Brookings Institute on Wednesday afternoon.

Powell recently indicated that the Fed could shift to smaller rate hikes next month, but also said rates may need to go higher than policymakers thought would be needed by next year.

Data and Events to Watch

The Dallas Fed Manufacturing Survey is today’s key data.

In other news, investors are keeping an eye on China where widespread unrest over the country’s ongoing Covid restrictions has erupted in dozens of cities, including capital Beijing. Some protestors have even called for China leader Xi Jinping to step down, illustrating an extraordinary level of defiance that is extremely rare in the tightly controlled communist nation. Chinese authorities in several cities have said they will begin rolling back some Covid restrictions but that’s likely going to be a tall order with the country also battling a record number of cases.

Keep in mind, many on Wall Street have been anticipating a gradual end to China’s “zero-Covid” policy since rumors started swirling last month. Even as authorities said the claims were untrue, many still believed the Communist party would eventually relent due to the fact that nearly three years of ongoing lockdowns have crushed China’s economy.

Now, investors are worried about more extreme lockdowns in the days ahead as well as fallout from civil unrest that could compound manufacturing and shipping delays.

At the same time, some believe the growing discontent could lead China to rethink its position which would then be viewed as mostly bullish by investors.

A fully reopened China, however, would also likely put upward pressure on energy prices at a time when the world’s oil supplies are highly uncertain.

The US and its EU partners are currently still in talks regarding a “global price cap” on Russian oil. The so-called Group of 7 is aiming to finalize the details ahead of December 5, when Europe’s embargo on Russian seaborne crude takes effect. The EU is still importing close to 2.5 million barrels per day of Russian crude, meaning Europe could have a sizable supply gap to fill.

Another important date for oil traders is December 4, when OPEC+ will meet to discuss a potential output increase. Lots happening the first couple of weeks in December and many investors and money managers will be squaring up and making final adjustments ahead of the Christmas and New Year holidays.

Keep in mind, there are only 19 more trading days until the Christmas break!