Gold continues to be right in the cross hairs of the bears in the market, as US economic data continues to show a large amount of hope and as Trumps 1 trillion dollar stimulus plan looks to take centre stage. ADP non-farm payroll data continues to show that the market is indeed strong, and the labour market still has a lot of room to grow, coupled with economic stimulus and we could certainly be in for a boom. A lot of the hedging in gold had been on the back of the Trump presidency but as the market has now calmed down selling has become the norm again until the next crises flares up. Certainly the manufacturing sector, and the construction sector are set to take off, and expectations are strong that the US market will boom which will in turn put pressure on gold, via people unwinding hedging but also a strong USD will have a large impact.
Looking at the charts it’s clear that the Gold market has been struggling under the weight of the bears and is extending further down the charts, with no sight of any upside potential in the near term. So far the psychological barrier of $1200 has been keeping the market back as it looks to trend lower. Beyond this level the next layers of support can be found at 1187 and 1172 and are likely to be tested by the market if continues the bearish trends we have seen of late. Any pull back up the charts may run into trouble on the 100 day moving average which for the most part has been respected and something to watch out for.
Oil has continued its run down the chart, and last night I spoke about further extensions lower which has already happened. With so many people in the market holding bullish positions such a sudden drop has triggered a large amount of selling in the market and the result is plain to see. It’s likely that OPEC will need more fire power if it’s to stoke up the possibility of big jumps in the market as US shale oil seems all the more likely to fire back in the coming months with the Trump administration being a big fan of it.
Oil while being bearish in nature has taken a breather at the 48.99 support level and 50.0 fib level which has been very strong at stopping momentum. However with little to push prices higher we could see large swings lower with the 61.8 level the next extension lower on the cards. I was surprised by the speed of today, but it goes to show how many people have been caught out in oil markets recently expecting a bullish result.