Gold Trades At Highest Level In 3 Months

A very good morning to you. It is Tuesday the 18th of May, so I hope you're doing well. Don't forget, if you're watching this on YouTube, to like and subscribe to the channel. And you can also check out AmplifyLive.com where we do have absolutely free access to our TraderHub portal, so do check that out. But otherwise, let's get straight into it and talk about what's going on this morning, and a little bit of recovery from generally a lower close that we had on Wall Street last night. The Dow closed down about 2/10, similar close to the S&P. The Nasdaq, slight laggard, down about 0.6%. Overall though, things generally a little bit more positive in Asia overnight, and index futures trade higher this morning going into the European swing. And let's just talk over a couple of charts first before we then start to incorporate some of the news and as well as looking at the, the day ahead. And going to start with precious metals, in fact. And let's have a look at spot gold, or gold futures, in fact, that I'm looking at here. And gold has risen to its highest level in more than 3 months. Uh, concerns over the pace of the global recovery creeping back a touch following a flare-up in coronavirus cases in parts of Asia specifically. So you've got kind of COVID concerns at play Secondly, expectations of further increases in consumer prices could start to bolster demand as an inflation hedge, as number— point number 2. And then point number 3, you've got a weakening dollar, and we continue to see that present, um, last week with non-commercial traders adding to their net short dollar positioning. The dollar index as well continuing its decline yesterday and this morning. It is seen down in the Dixie once again, trading down 0.1% around 90, um, at the 90 handle, which is quite key as well to keep an eye on. So yesterday in gold, we saw a nice breakout. This was actually Sunday night's trade. Two, two kind of classic opportunities to get long this market, uh, one coming in the overnight Asia-Pac session, as I said, Sunday going into Monday. But then we had another move down to it at that same range high kind of zone that had been in play over the course of the last week and a half or so. Then we saw a really nice push-up during North American trading hours, and then Asia's just kept us up at this level. And this was our target, remember, we were talking about this yesterday, uh, $18.75, and we got there, or within literally half a dollar of. So, uh, and on the daily chart, you know, this is unaltered from what we were looking at yesterday, which was that significant breakout of the levels around $45 which was as well around the high that was capping price action in early Feb. And if we were to get a head of steam and break technically through that point, then we didn't really anticipate a lot of technical resistance until we got up to $75. And then here we are. So yeah, nicely played out there in the gold market. Similarly, precious metals just generally following suit. We were kind of stalking silver prices yesterday they were very close proximity, kind of tapping on what was that level at $28 yesterday. And then when gold started to just progressively push on, we saw a nice opportunity to get long as well on silver, broke through the previous high that we had on the 10th of May. And then the obvious target to take some about a half a dollar higher up and around those previous highs that we're seeing on the 23rd of Feb. And we sit just above those levels here now at the moment, uh, as we start to get slightly more up and around the overbought territory on the RSI. Again, on the point of the 28 break, it was looking quite comfortable on these indicators that we could have some, uh, further headroom, and we just needed that sympathy play with gold having made those extensions for those other metals to, to follow suit. Um, so yeah, nice, nice moves in the commodity space. Otherwise, in the equity space, Uh, very quiet overall. I mean, Monday's calendar was pretty quiet, today's calendar is pretty quiet, and it is in terms of US data a fairly quiet week. But the NASDAQ 100, still keeping an eye on this, this rectangle here, which was going back to the highs we had back on the— basically at the 2nd of May, that double bottom on the 4th and 6th. And then, although a little bit rough and choppy around the end of last week, it has held And we're right back up there testing at the moment after initial declines that were seen in the futures market really this time yesterday. That'd be quite key. Again, any break above that, things could get more progressively bullish on a bit of a further reversal from the sell-off that we had last week. Uh, unlike some of the other indices, the NASDAQ still got a little bit of way to go before we start taking back some of the selling pressure that was seen at the start of last week on Monday session in particular. As far as the S&P is concerned, just have a quick look here. So S&P at the moment, uh, not, not a great deal of interest here for me right now, uh, at the bottom end of this recent range fleshed out yesterday evening. Um, at around 41.38. I think that's a good area now of support. You've got the daily S1 on the pivots, you've got yesterday's low and that respective high as well we had on before the breakout on the 14th of last week. So I like that area now for any support on the pullback of prices to just eke out this kind of range that we might trade at the moment. On the upside as well, you've got the R1 sitting just above, um, the 16th high. This was coming into, well, really the recommencement of electronic trade when we reopened before we saw a bit of a decline on Monday night. But that'll be probably the range I'll be looking at at the moment, and then looking at more interest if equities continue that recovery on a break, pullback, and then extension of that recovery from the sell-off from the beginning of last week. Or if we come back down to the lower bound to play off that support area, uh, would probably be, um, what I'd be looking at for, for the time being. On the equity side of things, I do want to quickly throw in Tesla's chart into the mix, uh, and I have marked this up. I'm gonna have to move a couple of things just so I can fit it in my screen I'm sharing with you at the moment. So there we go, and we're looking at Tesla shares. Now obviously Tesla have come under some pretty extreme pressure, really. One, and it's been pretty persistent. I mean, if we go from where we were, literally, um, year-to-date highs were only seen on the 25th of January. It really wasn't that long, that long ago. But if we go back up to when we were trading Tesla, which was basically $900, to the lows we printed yesterday, we're off around nearly 40% in Tesla shares. Now, as you can see, after Cathie Wood came out and she was selling some of her holdings in Tesla at the moment— you remember, she was kind of freeing up some cash, it seemed, to get into Coinbase, of which she's feeling a bit of pain at the moment, but filings would show she continues to be quite an active buyer of dips in coin. But here in Tesla, it's just gone from bad to worse almost. And the reason why I'm talking about this is because there's another little string to that bow that's come out, uh, or been unveiled, if you like, from a short position that's been built up by a very infamous character in markets. But here you've got Elon on SNL, you've got China production issues that the car manufacturers faced, just given some of the ongoing tensions as well between, on the state level, US and China. You've then got the U-turn on Bitcoin payments. Uh, and obviously cryptos had some high volatility, particularly downside in Bitcoin, uh, over the last couple of days as well. Stabilized a little bit at the moment. 542 obviously is a really big level of support on the downside, as you can see marked up here for the 2nd of December and on the 5th of March. Any breakdown of that, I would say we run down to 500 ASAP if that were to be taken out. Now the reason why I'm mentioning this is because we had a lot of filings from hedge funds last night, and Michael Burry, who you probably realize from The Big Short, obviously very famous individual from shorting in the financial crisis, uh, subprime, and he basically has come out and it has revealed that his fund has reported put options on 800,100 Tesla shares. Um, now that position size is worth roughly around $534 million. So it's going to be interesting to see. I'm sure Elon is going to bite. He almost always does. So I'll be expecting a tweet probably from him today to try and defend himself. Um, but yeah, another kind of meaningful development here that I can kind of annotate on this Tesla chart. And I'll be interested to see Although timing specifically, it's quite difficult to get a real nail down of when, uh, Burry was starting to build up this position, but it definitely has been accumulating over the period of the first quarter. So be interested to see how Tesla shares open when we get underway a bit later on. I'll keep you updated in the community about its pre-market movement. Otherwise, the other chart I wanted to quickly mention was was WTI crude. And, you know, despite some of the things that I've mentioned that are lifting gold, which is a slight apprehension on the COVID situation coming out of Asia, overall the Western world, touch wood, thankfully at this point is moving along on, on cue, if you like, in terms of the US and also in the UK, at least in the latter for now. Obviously we continue to monitor with vigilance the Indian COVID variant. Variant situation. But with WTI crude, we've always remained quite bullish here at Amplify about the idea that reopening further airline travel, that's only going to pick up and increase whether or not it gets disrupted by this Indian variant now globally or not. The point is, in the future there will be a return, a normalization if you like, in terms of the physical demand for, for crude oil. And so just having a look at oil here at the moment, I'm going to flip it over to a daily chart, and this is what I'm looking at. So this is going back to give you a bit of idea on the, the axis on the bottom. Sorry, let me just change over here. Um, this is what I'm looking at. WTI crude, 2018 is here when we had the peak up around $75. You've then got 2019 here, which is when April 2019 we hit a high around $66.76. Close proximity to that as well, beginning of 2020. Before then, the pandemic hit. We've had a rejection at technically around these levels at the beginning of March, and who— here we are again. And you know, if you look at the 90-minute, we are just literally tapping on that door looking for a break here. So something I'm definitely watching today and this week, and if we can get above that, and it's been quite bullish in the return here that we've that we've had over the last day's price action to take us back up to this level. Then again, you know, if we break higher here, yes, we've got a bit of an extension on that move on the 8th on the failed break. But then there's not a great deal of resistance here technically then if you start looking back on these charts. So the obvious target here has got to be, you would think, the $70 handle psychologically. And that puts us back up at the highest levels that we would have traded since basically October of 2018 at that point. So still looking quite, quite bullish there at the, at the moment. A few other things then from the headlines that I just wanted to cover, having just looked at the charts there, and going to just talk about the Fed briefly. We've got the FOMC minutes obviously tomorrow. To be quite frank, I'm not really expecting a great deal from them. Further reiteration from one of the senior Fed officials, Carida, last night said that during a webinar that we could have expected April payroll report shows we have not made substantial further progress on the central bank's goals for employment and inflation laid out as their thresholds to begin scaling back their bond purchase program. So, Karina, the Fed continue to just remain firm for the time being on that front. We did have overnight, just so you're aware, the RBA minutes Um, not really too much in the way of a reaction. I would say if anything, just pervading dollar weakness helping some of these currency pairs remain fairly buoyant. And actually, I'll come back to it, euro's just had a breakout here on the upside. But the RBA said it will pay close attention to economic data and conditions in financial markets when deciding whether to roll over its yield target maturity and or to undertake further quantitative easing. The RBA is due to make a call at its July 6th meeting, or whether it will move that 3-year yield target to November 24th bond from the current April 2024 security. But that's understandable just given the timings and the rollover. I don't think would be that surprising. But yeah, I just mentioned the euro, so a bit of a further extension of that dollar weakness which we're talking about yesterday, still very prevalent at the moment. And yeah, the euro is just testing here a fairly interesting level which is, as you can see, a bit of a breakout from that prior week and that previous Friday's price activity, which is around the 121.85 level. Just looking here on the, on a daily, yeah, we start to come up to the 122 handle. It starts to get a little bit more interesting from a resistance point of view, whether or not we can continue this upward trend that we've seen really take hold since the end of March, April. Been really good for the for the euro, obviously byproduct of dollar softness. But with the vaccination programs where Europe was lagging through that period of the beginning of the year, January, February, now having to start to see things picking up a little bit more pace. Albeit I saw this morning J&J very slow to fulfill their Q2 deliveries to the eurozone for their coronavirus drug at the moment. But look, looks quite dollar-centric at the moment because cable's also continuing the upward trend. And this is what we were talking about yesterday. There's a lot of UK data coming out this week— jobs, inflation, all these types of metrics, growth, PMIs. They all should lend their hand to a more positive backdrop, despite UK ministers reportedly discussing contingency arrangements for local lockdowns or delaying the reopening on June 21st. I think the government has been quite clear about the data over dates, and any, any delaying of June 21st I don't think is particularly that big a deal for sterling as a headwind if it moves by a couple of weeks, and also if they adopt a more localized rather than national program. But with restaurants, hospitality, things like that opening in this latest lockdown, I don't think it really detracts from that economic rebound, so to speak, not unless obviously the Indian variant situation in cases get materially worse from here on out. And ITV's Peston did report that the prospects of a final easing of lockdown restrictions in England going ahead precisely as planned on June 21st are close to nil according to ministers and officials. So, uh, you can pretty much take it now that it's probably unlikely to happen in that current complete restrictions being dropped form. Having a look at cable here then, again, technically quite, quite an important breach now of where we were from the high on the 11th. And technically, as we've said before, we've got the 142 handle sat just above here, about 12 pips away from current price. But really, resistance-wise, not a great deal until we get the year-to-date high seen on the 24th of Feb now at 1.4245. And we have had the jobs data out of the UK this morning, not really a focal point to be quite honest with you, not with furlough still in play. The ILO unemployment rate, uh, 4.8% versus expected 4.9%. But the thing is about those jobs data is the government strategy of adopting furlough until September is allowing then kind of companies to keep people employed through then allowing the economy to reopen through May, June, July, August. By that point, the economic activity should have really picked up a lot of pace, and it means that perhaps then a lot of these employees might have survived the worst of the pandemic crisis, potentiality of being laid off. At that point, there's enough demand there to warrant them keeping their position, and unemployment spike never actually materializes, just given the rollover and length of that government job support scheme. All right, quick look at the calendar then for today, and we do have at 10 o'clock the Eurozone Q1 GDP flash estimate, and you've got the employment figures as well. So just keep an eye on if you're trading European products. And then this afternoon, pretty quiet overall. Building permits, housing starts coming out the US at 1:30. And from a speaker's perspective, ECB President Lagarde does speak later this afternoon at 3 PM, but she's speaking at a student award ceremony. No text is expected there, and given the theme of the conference, not expecting any market-moving commentary. Bank of England Governor Bailey and a number of the BOE officials do speak in front of the Lords Economic Affairs Committee on everything from the future of QE, the bank's transparency, its mandate, and so on. Perhaps interesting to keep half an ear on, but I don't think it's really going to be a material mover for sterling in terms of any new commentary on the economic situation or future monetary policy. Then from a Fed voter's point of view, you've got Bostic speaking at 3:30 about resilience of the economy and financial system. Probably one thing to keep an eye on as well pre-market is not only Tesla, as I mentioned, but also the kind of brick-and-mortar retailers. You've got Walmart and Home Depot going to report pre-market, two of the bigger kind of names in that space. And obviously coming on the back of whether or not there's enough firepower left with those last stimulus checks that we saw going through January, March, to see how these guys actually performed but amid also those COVID restrictions in America. Um, so that is it. I'm gonna let you guys get on. Uh, so set up for— still, although calendar-wise fairly quiet, still looks like a pretty interesting day could unfold. So good luck, and, uh, I'll see you in Amplify Live chat room. Thanks very much.