Golden Bulls Yet Among The Market

The US dollar’s strengthening, the expected interest rates hike and the lower risk and volatility in stock markets are most important factors that are driving gold prices down. The exposed Trump’s program for boosting the GDP definitely will lead to rising interest rates and stronger US dollar, which is attracting for investors. Hence this is bullish for the dollar, gold is going to suffer. 

But in case we are having long term interest rates increase, this does not always mean that we will have falling prices in gold. According to the World Gold Council the average gold returns were positive as long as interest rates increased gradually and didn’t reach extremely high levels - over 4%. Some economists have shared the opinion that during Trump’s presidency a recession will be a fact, because the current expansion on stock markets is taking too long time. In this common, the investors in gold mining companies should consider this and take steps for profit taking, but instead of this the observation is that they keep their investments for a longer term. 

And while we are witnessing the brutal post election sell-off, shall we abandon all things gold?

In fact the post elections fever dumped the gold hedges  and the gold suffered huge drop for the last 3 weeks. Obsessed by the fear of the unexpected, traders generated enormous sell offs and couldn’t think deeper over the market situation. If looking inside the gold stocks’ fundamentals there might be found an amazing way to fight the prevailing fear. 

The gold miners just released their third-quarter results, which proved very impressive. I suggest you to look at the below GDX Component Comapnies’ Fundamentals Q3’2016 table.  Lower costs and higher gold prices usually lead to surging operating cash flows and profits and the gold miners’ fundamentals are stronger now. So golden bulls are still among the market.

EUR/USD: Far Outside The Realm Of Expectations

48 hours after the US presidential elections, investors continued to buy US dollars. No surprise to anyone that the choice of the Americans came unexpected even to themselves as the high volatility of markets continued throughout the day. Instead of negativism, Trump’s victory resulted in additional investment assets as ultimately analysts expect that choice to be positive for the US economy.

At the end of the week the euro remained highly pressured by the US dollar, pinned at new fresh 8-month low at 1.0828 and closed at 1.0852. 

From retrospective viewpoint EUR/USD dropped with around 300 pips comparing with just a week ago levels. On Wednesday early morning the pair topped at 1.30 and according to current level, makes some 450 pips drop. A huge drop. A dramatic turn. And the worst performance for the year. The downside movement for the pair seems to be favoured having in mind that now the focus is set on the Fed’s meeting next month and the divergent monetary policy outlook. The technical reading also confirm the bearish trend. RSI is indicating oversold conditions as well as the stochastic, which is showing lack of momentum.

The Trump factor high rocketed the USD/JPY pair

As expected there was high volatility and this naturally perplexed the markets. The winner turned to be Trump and therefore the US Dollar began to weaken against the major currencies. The Mexican peso hit a record low. The greenback began to weaken against the Japanese Yen and the EUR as well and pinned 101.20 and 1.1300 respectively. Looking for safety, markets turned to more secure currencies – the Japanese Yen and the Swiss franc.  

After marking the low at 101.20, the USD/JPY pair quickly pushed higher to print new fresh 4-month high at 105.85. Although at the moment the uncertainty has gripped the markets, the pair is continuing its rally, as seen on the 4-hour chart. 

And indicators seem to favour the rally. Its clearly seen the sharp bounce from the oversold areas. RSI is showing overbought market and is currently placed at 63%. Stochastic turned to north and is also confirming the strong bullish slope. Another point is that the price has returned back above the levels of the 100-day and 200-day SMA. 

First resistance is seen now at 106.00 while the first support is currently located at 105.50.

Thriller, votes and EUR/USD

EUR/USD was thrilled during yesterday’s trading and tried to push higher, marked an intraday high at 1.1110, but closed lower at 1.1040. The pair sloped under the range and couldn’t clearly break above the 200-day ЕМА. 

Monday’s mood seems to be extended into today as markets are already pricing the US votes. Initial results are showing a slight advantage for Mrs Clinton and therefore equities and commodities currencies were elevated. Meanwhile some macro data in Europe was release, but markets ignored it, as the attention is focused on the US election day.

The EUR/USD is feeling under great pressure and the pair fell to previous lows and was testing the 1.1010 level. Clinton’s victory might drive the pair downwards to October 25th low at 1.0850.

Indicators are placed within negative territory. RSI is currently at around 36% level and stochastic is showing oversold market, both confirming the bearish trend. 

Anyway the elections results have the last saying and the pair’s direction is still being uncertain.