Gold claws back lost ground after Friday's slide

Global Stock Markets

Softer tone to dollar takes pressure off gold. Silver firms after biggest 1-day drop since Dec. 2016.

 

Gold edged up on Monday, clawing back some lost ground after posting its biggest one-day loss in two months in the previous session as a softer tone to the dollar took some pressure off the metal. 

Gold fell 1.2 percent on Friday after stronger than expected U.S. payrolls data shored up expectations that a pick-up in inflation will spur further U.S. interest rate hikes this year, boosting the U.S. 

currency, in which it is priced. Having rallied in the wake of the data, the dollar eased 0.1 percent against the euro on Monday. 

 Spot gold was at $1,336.15 an ounce at 1030 GMT, up 0.2 percent but well below late-January's 17-month high of $1,366.07. 

U.S. gold futures for April delivery were $2.10 an ounce higher at $1,339.40. 

Stock markets were routed around the globe on Monday and bond yields rose as resurgent U.S. inflation raised the possibility central banks would tighten policy more aggressively than had been expected. 

While gold is often considered an inflation hedge, Julius Baer said in a note, the fact that price pressures were being driven by confidence about growth rather than dollar weakness and rising oil prices meant it was failing to react positively. 

Futures markets reacted after the jobs data by pricing in the risk of three, or even more, rate rises from the Federal Reserve this year. 

As well as their impact on the currency markets, rising interest rates weigh on gold in their own right, as they increase the opportunity cost of holding non-yielding bullion. 

Meanwhile, hedge funds and money managers raised their net long position in COMEX gold contracts in the week to Jan. 30 to their highest level since late-September, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. 

Spot silver was up 1.1 percent at $16.80 an ounce, having earlier matched the previous session's five-week low of $16.54. 

The metal fell 3.7 percent on Friday in its biggest one-day decline since Dec. 2016. Platinum was up 0.7 percent at $992.90 an ounce, while palladium , which alone among the major precious metals posted gains on Friday, was down 1.1 percent at $1,035.50 an ounce.

Gold retreats farther below $1350 level ahead of US jobs data

Global Stock Markets

Gold traded with a mild negative bias through the mid-European session on Friday and has now eroded all the previous session's modest gains.

 The precious metal stall its modest uptick witnessed over the past two trading sessions and failed to build on its strength further beyond the $1350-51 region. A goodish pickup in the US Dollar demand was seen denting demand for dollar-denominated commodities - like gold.

Meanwhile, a fresh wave of global risk aversion trade, which tends to benefit the precious metal's safe-haven demand, seems to have been largely offset by a strong follow-through upsurge in the US Treasury bond yields and did little to lend any support.

It would now be interesting to see if the commodity is able to regain any traction or continues with its near-term consolidative price-action as investors look forward to the keenly watched US monthly jobs report, NFP, before positioning for the next leg of directional move.

Immediate support is pegged near the $1340-38 region, which if broken could drag the commodity further towards $1332 intermediate level en-route $1326 strong horizontal support

On the upside, the $1350 region now seems to act as an immediate resistance, above which the metal seems to dart towards $1358 supply zone en-route recent swing highs resistance near $1366 level.

Gold dips ahead of U.S. nonfarm payroll data

Global Stock Markets

Gold prices fell on Thursday after the Federal Reserve left interest rates unchanged but hinted at hikes later this year, and as investors awaited the U.S. nonfarm payroll data for cues on the health of the world's largest economy.

 
Spot gold was down 0.4 percent at $1,339.71 perounce, as of 0831 GMT. It touched $1,332.30 an ounce in the previous session, its lowest since Jan. 23.

U.S. gold futures for February delivery were nearlyflat at $1,339.00 per ounce.


The Fed said inflation is likely to quicken this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell.

The dollar held steady against a basket of major currencies on Thursday after the Fed signaled its confidence about inflation and growth in the United States' economy, reinforcing views it will raise rates several more times this year.

Inflation worries generally boost gold, which is seen as a safe-haven against rising prices.

But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it does not pay interest.

A stronger dollar makes bullion more expensive for holders of other currencies, while higher interest rates lead to higher bond yields and dampen demand for non-yielding gold. Traders now await the jobs report on Friday that will include data on nonfarm payrolls to see if they offer more than a brief respite to the ailing dollar.

Spot gold is biased to break a resistance at $1,347 per ounce and rise towards the next one at $1,357, as it has stabilized around a support at $1,335.

In other precious metals, silver slipped 0.4 percent to $17.25 per ounce. Platinum declined 0.9 percent to$991.00 per ounce.

Palladium edged 0.8 percent lower to $1,019.50 perounce after falling to $1,013.72 earlier in the session, its lowest since Dec. 18.

Gold picks up after hitting 1-week low but downside risks persist

Global Stock Markets

Spot gold may fall to $1,316/oz - technicals. SPDR Gold holdings down 0.2 pct on Monday. Investors await Fed meeting for rate hike cues.

Gold recovered from a one-week low on Tuesday as the dollar reversed gains and bond yields came off their highs, but short term risks were to the downside as traders awaited a Federal Reserve policy meeting and U.S. jobs data. 

 U.S. Treasury yields - the benchmark for world lending rates - moved above 2.7 percent overnight, their highest in 3-1/2 years, helping the dollar off its lows and initially weighing on gold until the trends were reversed. 

Still, markets are bracing for potentially hawkish language from the Federal Reserve, which will begin its two-day policy meeting on Tuesday, as all signs are that U.S. economic growth is picking up steam. 

 Spot gold was up 0.4 percent at $1,344.76 per ounce at 1120 GMT, after a 0.7 percent drop in the previous session. Earlier in the day, bullion hit its lowest since Jan. 23. 

 U.S. gold futures were 0.3 percent higher at $1,343.90. World equity markets were in their biggest two-day dive in six months, helping safe haven gold, while the dollar index slipped back after climbing overnight amid firmer bond yields. 

Rising bond yields increase the opportunity cost of holding non-yielding bullion, while also strengthening the dollar, thus making dollar-priced gold costlier for investors holding other currencies. 

Investors are awaiting U.S. President Donald Trump's State of the Union speech due later for comments on the dollar. 

 U.S. Treasury Secretary Steven Mnuchin gave dollar bears a major boost last week with a tacit endorsement of a weak dollar, though Trump later tried to row back from those comments. 

Spot gold may break a support at $1,335 per ounce and fall more towards the next support at $1,316, according to Reuters technical analyst Wang Tao. 

 Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.17 percent to 846.67 tonnes on Monday. 

 Silver rose 0.6 percent to $17.26 an ounce. Platinum slid 0.2 percent to $1,001.40 after dropping to its lowest since Jan. 23, while palladium fell 0.1 percent to $1,084.20, after hitting its lowest since Jan. 11.

Gold clings to gains, around $1355 ahead of key US economic releases

Global Stock Markets

Renewed USD selling helps regain positive momentum.

Reviving safe-haven demand further supports the up-move. Important US macro data eyed for fresh directional impetus.

Gold held on to its modest gains through the mid-European session and is currently trading around the $1355 region ahead of the US macro data.

A fresh wave of US Dollar selling pressure underpinned demand for dollar-denominated commodities and helped the precious metal to recover part of previous session's late reversal slide, led by "strong dollar" comments by the US President Donald Trump.

Adding to this, the prevalent cautious trading sentiment across European equity markets was also seen supporting traditional safe-haven assets and collaborated to the yellow metal's steady rise on the last trading day of the week.

Further gains, however, remained capped amid a goodish pickup in the US Treasury bond yields, which tends to drive flows away from the non-yielding commodity.

Moreover, traders also seemed to refrain from placing aggressive bets ahead of today's important US macroeconomic releases - advance Q4 GDP growth figures and durable goods orders data, which would be looked upon for some fresh directional impetus.

Technical levels to watch

Immediate resistance is pegged near $1358 level, above which the commodity is likely to head back towards $1366 area (yesterday's swing high) en-route August 2016 highs resistance near the $1374-75 region.

On the flip side, retracement back below $1350 level is likely to accelerate the slide towards $1340 horizontal zone with some intermediate support near the $1346 level.

Gold hits four-month high on dollar weakness

Global Stock Markets

Gold hit a four-month high on Wednesday following statements from the US Treasury secretary that a weaker dollar is ‘good for trade.’ 

Gold rose to $1,348.67 a troy ounce in morning trading, its highest level since September.

Gold is in thrall to the dollar, full stop, says David Govett, head of precious metals at brokerage Marex Spectron.

 Gold has rallied 9 per cent since mid-December on the back of a weaker dollar, which makes gold more attractive for overseas buyers.

 The trade-weighted dollar index fell to its lowest level in over three years on Wednesday following statements by US Treasury secretary Steven Mnuchin at Davos that a weaker dollar is good for US trade in the short term.

Other precious metals have also benefited from dollar weakness this year. Platinum, a metal used in jewellery and catalytic converters for diesel cars, is up 9 per cent year-to-date to trade at $1,011.83 a troy ounce.

Silver, however, has been left behind, due to concerns about the impact of President Donald Trump’s decision to put tariffs on imports of solar cells. Silver paste is a key ingredient in solar photovoltaic cells.

Gold jumps to near 4-month high as dollar slips sharply

Global Stock Markets

Gold jumped to its highest in nearly four months on Wednesday as the dollar tumbled to a six-week low versus the Japanese yen and slid against the euro, lifting assets priced in the U.S. currency and offsetting a rise in global yields.

The dollar fell as much as 1.2 percent against the yen after the Bank of Japan’s move to trim its long-dated government bond purchases earlier this week, putting the U.S. currency on track for its biggest two-day drop in nearly eight months.

The BoJ move also lifted bond yields across the world, generally a negative factor for gold as it increases the opportunity cost of holding non-interest bearing bullion. However, the impact of the dollar’s fall outweighed that factor.

Spot gold was up 0.9 percent at $1,324.40 an ounce at 1107 GMT, having earlier touched its highest since Sept. 15 at $1,326.56. U.S. gold futures for February delivery were up $11.50 an ounce at $1,325.20.

The dollar’s slide against the yen also saw it move lower against the euro, with the single currency up 0.6 percent versus the U.S. unit.

Major government bond yields hit multi-month highs on Wednesday as investors reevaluated the likelihood of continued easy-money policies by the world’s major central banks following the BoJ move. The 10-year U.S. Treasury yield hit 2.57 percent for the first time since March.

Among other metals, palladium was down 0.1 percent at $1,098.50 an ounce, after hitting a record high on Tuesday at $1,111.40. Tightening emissions standards and a switch away from diesel cars to more palladium-heavy gasoline models has shored up demand expectations for the autocatalyst metal.

Silver was up 1.2 percent at $17.16 an ounce, while platinum was 0.1 percent higher at $965.90 an ounce.

Gold slips from 2-wk high as dollar gains

Global Stock Markets

Spot gold resistance at 200-day moving avg around $1,269 -trader 

Spot gold was down about 0.1 percent at $1,265.02 an ounce as of 0816 GMT, after earlier hitting its best since Dec. 6 at $1,268.26.

U.S. gold futures fell 0.1 percent at $1,268.30 an ounce.

The dollar edged higher against the yen on Thursday, after comments by Bank of Japan Governor Haruhiko Kuroda reinforced expectations that the BOJ was in no hurry to move away from its ultra-loose monetary policy.

Earlier in the session, gold prices hit a two-week high, helped by seasonal demand and steady closes on the technical charts, a Hong Kong-based trader said.

The 200-day moving average around $1,269.50 is currently weighing upon any attempts higher (for gold), MKS PAMP trader Sam Laughlin said in a note.

A rise in U.S. bond yields from optimism after lawmakers in the United States approved the biggest overhaul of the country's tax code in 30 years, also offered support to the greenback.

Rising bond yields tend to boost the dollar and weigh on the appeal of non-interest bearing gold. Asian stocks, however, traded lower as cheer waned after the passage of the bill with investors remaining divided on its impact on the U.S. economy.

U.S. President Donald Trump on Wednesday threatened to cut off financial aid to countries that vote in favor of a draft United Nations resolution calling for the United States to withdraw its decision to recognize Jerusalem as Israel's capital.

Among other precious metals, spot silver was unchanged at $16.17 an ounce, having climbed to a two-week top of $16.26 in the previous session. Platinum was 0.5 percent lower at $913.50 an ounce,
after marking its best since Dec. 5 in the previous session.

Palladium gained 0.2 percent to $1,027.57.

Gold prices edge up in quiet trade

Global Stock Markets

Gold prices inched higher in quiet trade on Wednesday as the dollar held steady on expectations the U.S. government would pass the country's biggest tax overhaul in 30 years.

Spot gold had risen 0.2 percent to $1,263.65 an ounce by 0347 GMT. U.S. gold futures were also up 0.2 percent, at $1,267 an ounce.

Digital currency Bitcoin was down 5 percent on the Bitstamp exchange at $16,810, after earlier dropping to a one-week low at $15,800.

Meanwhile, the dollar was supported after the House of Representatives on Tuesday approved the proposed U.S. tax overhaul, though Congressional Republicans will likely need to hold another vote later on Wednesday due to procedural issues.

Upbeat U.S. housing data and the House's approval of the tax overhaul boosted U.S. Treasury yields.

Silver was up 0.1 percent at $16.13 an ounce, after touching a two-week high of $16.22 in the previous session.

Platinum was nearly unchanged at $913.40 an ounce, having hit a two-week peak of $919.40 on Tuesday.

Palladium was up 0.1 percent at $1,021.65 an ounce.Subscribe to our Daily Newsletter

Gold eases from six-week high ahead of Fed chair confirmation

Global Stock Markets

Gold eased back on Tuesday from the previous day's six-week high as the dollar edged up ahead of a confirmation hearing for U.S. Federal Reserve chair nominee Jerome Powell. 

In prepared remarks for the hearing released by the Fed on Monday, Powell defended the Fed's use of its crisis-fighting powers, suggesting a broad extension of current Chair Janet Yellen's stance on monetary policy.

However, there is some risk around the event which is supporting the dollar after its slide to two-month lows on Monday, analysts said. Spot gold was down 0.1 percent at $1,293.21 an ounce at 1105 GMT, having hit a peak of $1,299.13 on Monday, its highest since mid-October. U.S. gold futures for December delivery were down $1.60 an ounce at $1,292.80. The dollar index was 0.2 percent higher against a currency basket.   

The Fed's ultra-low interest rate policy has been a key factor supporting gold over the last decade. Low rates cut the opportunity cost of holding non-yielding assets such as bullion, while depressing the dollar, in which it is priced.

The U.S. currency has also been weighed down in recent days by worries about delays in the implementation of U.S. tax cuts.

President Donald Trump's drive to overhaul the U.S. tax code headed toward a new drama on Tuesday in the Senate, where a pair of Republican lawmakers demanded changes to the party's tax bill in exchange for their help in moving it forward.

Among other precious metals, silver was down 0.1 percent at $17.01 an ounce, while platinum was 0.2 percent lower at $945.50 and palladium was down 0.6 percent at $1,001.05.Platinum has broadly maintained a historically unusual discount to its sister metal palladium since late September.

Platinum looks oversold, HSBC said in a note on Monday, as greater investor and jewellery demand has the potential to support prices, while concerns over demand from carmakers, which use the metal in catalytic converters, may be exaggerated.

Palladium has surged on structural deficits caused by limited mine supply and good auto demand, it added, but its rally is vulnerable to profit taking.

This Gold Fund Is Joining the Bitcoin Frenzy

Global Stock Markets

The Old Mutual Gold & Silver Fund, which manages $220 million of mostly precious metal equities, is jumping on the bitcoin wagon.
 

The fund started buying in April with a mandate to allocate as much as 5 percent to cryptocurrencies, according to its manager, Ned Naylor-Leyland. The idea is to take profits from bitcoin as it advances to reinvest in gold and silver assets, he said in an interview on Nov. 16.

Bitcoin was explicitly designed to be digital gold, said Naylor-Leyland. “So if you’re going to have a small proportion of a fund in bitcoin, it should be in a gold fund, because that’s exactly the point. It’s about bringing the ownership of disciplined money into the modern world. Bitcoin is paving the way for the reintroduction of gold as global money.”

Bitcoin’s up more than eight times this year to top $8,000 as entrepreneurs in the field say its value lies in proof of concept for a new kind of payment system not reliant on third parties like governments, big banks or credit-card companies. By contrast, gold’s held in a tight range since February, with a short break upward in September as U.S. and North Korea tensions spiraled.

The virtual currency has many backers and detractors. Mike Novogratz, who’s starting a $500 million hedge fund to invest in such assets, said bitcoin will likely end the year at $10,000. Standpoint Research’s Ronnie Moas on Monday raised his 2018 price target for the second time this month, to $14,000 from $11,000. But Goldman Sachs Group Inc. last month said gold wins out over cryptocurrencies when assessed on most of the key characteristics of money.

Bitcoin and blockchain resolve gold’s problems of divisibility, ownership and speed of transmission, said Naylor-Leyland, who’s investing through a Swedish-listed exchange-traded fund. “We’re going to revert to sound money,” he said. “If you imagine sound money and blockchain together, there’s quite an exciting potential outcome.” His fund has about 80 percent in gold and silver equities and most of the rest in physical metal.

Bitcoin traded at about $8,250 as of 1:26 p.m. in Singapore on Thursday, some $120 short of its record on Tuesday. Spot gold was at $1,289 an ounce.

New Zealand dollar sunk, The euro gained

In late October, the New Zealand dollar sunk to a five-month low of $0.6818 as a change in government unsettled investors. 

The dollar index against a basket of six major currencies was 0.1 percent lower at 94.789 .DXY, staying below a three-month high of 95.150 set in late October. 

It had reached that peak on hopes for enactment of U.S. tax reforms. But recent uncertainty over the fate of the tax plans has weighed on the dollar. 

A U.S. Senate tax-cut bill, differing from one already in the House of Representatives, was expected to be unveiled on Thursday, complicating a Republican tax overhaul push and increasing scepticism on Wall Street about the effort.

The euro gained 0.1 percent to $1.1604 EUR= after touching a 3-1/2-month low of $1.1553 at the week's start. The greenback slipped 0.2 percent to 113.640 yen JPY=. U.S. crude oil futures CLc1 was nearly flat at $56.82 a barrel.

Government data showing a rise in domestic crude production had weighed on oil overnight but rising tensions in the Middle East limited the losses. 

U.S. crude rose to $57.92 on Wednesday, highest since July 2015, as tension flared between Saudi Arabia and Iran, while the Saudi crown prince tightened his grip on power. 

Spot gold XAU= added 0.2 percent to $1,283.45 an ounce. 

The precious metal had risen to a three-week high of $1,287.13 an ounce the previous day as a potential delay in the U.S. tax reform plan was seen moderating the Federal Reserve’s interest rate hikes next year and support non-yielding gold.

Palladium XPD= was 0.1 percent higher at $1,014.25 an ounce. The metal used for auto catalysts has rallied on an expected supply deficit and higher demand in the car market, reaching a 16-year high of $1,019 on Wednesday.

In currency markets, The dollar was a shade softer, The New Zealand dollar hit low

In currency markets, the dollar was a shade softer at 93.768 against a basket of competitors. It also edged down to 112.57 yen, having been as high as 113.43 on Friday.

The euro was a fraction firmer at $1.1737, aided by TV pictures of hundreds of thousands of people in Catalonia’s capital Barcelona demonstrating against moves to declare independence from Spain.

Catalan leader Carles Puigdemont is expected to address the region’s parliament on Tuesday, when he could unilaterally declare independence.

The U.S. mission in Turkey and subsequently the Turkish mission in Washington mutually reduced visa services after a U.S. mission employee was detained in Turkey last week. 

The pound had popped higher on reports British Prime Minister Theresa May could sack Foreign Secretary Boris Johnson as she tries to reassert her authority after a series of political disasters. 

Sterling had been undermined by speculation that May herself could be ousted ahead of crucial Brexit talks between Britain and the EU. The initial spike could not be maintained, however, and the pound soon steadied around $1.3090. 

The New Zealand dollar hit a four-month low on Monday after a final vote count in the country’s tight general election released over the weekend failed to identify a clear winner. 

In commodity markets, gold gained 0.5 percent to $1,282.56 an ounce and off a two-month low touched on Friday. 

Oil prices regained some ground on expectations that Saudi Arabia would continue to restrain its output in order to support prices, and as the amount of rigs drilling for new oil in the United States dipped.

Brent futures gained 13 cents to $55.75 a barrel, while U.S. crude rose 17 cents to $49.46.

Precious Metals

Gold (GLD) briefly made new highs above $1,300, but couldn’t follow through. The reaction may look slightly bearish, but perhaps this was expected after a rally of nearly $100 from the July lows.

Silver (SLV) on the other hand seemed to break-out and should now rally to at least $17.75.
A move to below last week’s low of $16.50 is a failed break like we saw in April r and there’s not much point to be long below there (at least no in the short term).

As the price moved below $47.58, it flushed out some of the late bulls, and we now have this count as the primary view.

There was a very nice reaction from $46.50, where wave C and wave A were equal, but does this mean that the correction is over? Perhaps, but here is a follow up from the chart from the 10^th of August highs (and was included in last week’s newsletter).

Oil is trading in a choppy range for over a year and we’re not sure there’s any reason for that condition to change, but we believe it could still work its way lower in the coming weeks for a buying opportunity at sub $45.

There’s not too much to say about Gas this week, but the shape and characteristics of this pullback is encouraging those who are long.

So far this August, we have a strong move up followed by a choppy, slow decline. However, this corrective sequence in gas has been so persistent we cannot say we have hit bottom until there is a sustained move above $3.

Yes, we see it too; this could go up or could go down, but the point is you don’t have to do anything right now. A trading opportunity comes at $2.70 or after a move above $3.

So that we are clear, none of this alters our longer-term view of a rally above $4, although Q1 2018 may be too soon for this call (could be Q2 but timing is always difficult)

Last week we called for ‘a dip to the 78.30% Fib at 92.7 and that looks like a decent spot to try going long’, which was decent in the short term (the weekly low was 92.73), but let’s look at the bigger picture:

We can see here that the C wave rally last week may have completed the correction and the dollar looks about ready for the final decline to below 91.

Everything Except Equities, a Market Update

Today we are going to look at everything except equities.  Since there is a lot to cover we are going to jump right into it.

Precious Metals: 

Gold (GLD) had a pretty good run at breaking out last week, but the NFP reversal put the move in doubt.

Continuing to go up after 3 weekly high closes is a tough ask and with a down week it is actually healthy and gives buyers an opportunity to get in. The next break should come now and take price through $1,295 for the buy stops and  $1,330 to $1335 our next target price.

Silver (SLV) is still very volatile and hard to analyze with any confidence. We think it’s best to just rely on solid set-ups, and there may be one when the trend-line below breaks on the next wave up. If the break comes in the wave of 3 position (we noted above), we know there are very high odds price will keep running up.
 
Oil (USO)

There are two likely scenarios in the short term.

Bullish: This targets $52.5-53.2 as long as the $47.5 breakout holds.

Bearish: This will flush out late bulls (we are noticing a few) and go sub $45 before the next leg of the rally. When there is this lack of a clear direction we recommend waiting until we see a cleat trend start. We are trading the time frame evidenced above and have long term target north of $60.

 Natural Gas (UNG)

Here we had back to the drawing board on natural gas, as the length of time it went sideways in July was far too long to see where it was likely to break out. We have therefore had to label the decline as an ABC correction, currently finishing on wave C.

This won’t (as you might expect) change much in the longer term, or even in the short term, but we are looking for a reversal at the end of wave C. It is interesting to see how the first 5 waves down (look at wave A) are contained in a channel and this channel broke; this is why we first thought that NG had bottomed in June, but unfortunately, we were wrong (it doesn’t happen often but we are only human) about the formation started another wave down for wave C.

We are looking for some sort move higher to confirm we have seen the bottom. At the moment, the last wave looks a bit small so it may still lead the price lower, but shouldn’t get lower than $2.6. We are still looking for a run to $4 and in the longer term, but the best way to play the reversal is probably long dated calls.

The Dollar News

The dollar has also been kept in check by political uncertainty as lawmakers investigate possible meddling by Russia in the 2016 presidential election and whether there was any collusion by Trump's campaign. 

The euro was effectively flat at $1.1639 EUR=, pulling back from a two-year high of $1.1712 hit on Tuesday on a stronger-than-expected German Ifo business survey. 

Expectations that the European Central Bank would begin phasing out its easy monetary policy sooner rather than later have supported the common currency this month. 

The dollar index against a basket of major currencies was little changed at 94.143 .DXY, after managing to put some distance between a 13-month low of 93.638 plumbed on Tuesday. 

The dollar was steady at 111.905 yen JPY= after surging about 0.7 percent overnight.

In commodities, crude oil extended its surge after jumping overnight on data showing a sharp fall in U.S. crude stocks last week.

U.S. crude CLc1 rose 1 percent to $48.38 a barrel and Brent added 0.8 percent to $50.62 a barrel LCOc1. 

Gold struggled as improved investor risk appetite curbed the precious metal's appeal. Spot gold XAU= was 0.15 percent lower at $1,246.52 an ounce following its ascent to a one-month peak of $1,258.79 on Monday.

The Dollar Index Was High, Japan's Nikkei Dropped

The dollar index was up 0.1 percent from the earlier low. Investigations into alleged Russian meddling in last year's U.S. presidential election are seen as potential roadblocks to President Donald Trump being able to implement his economic agenda. 

Speculative investors turned negative on the dollar last week for the first time in more than a year, data from the Commodity Futures Trading Commission showed on Friday.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan reversed earlier losses to edge up 0.3 percent. 

But Japan's Nikkei dropped 0.6 percent, pressured by a stronger yen. Australian shares retreated 0.7 percent and South Korea's KOSPI edged down 0.1 percent. 

Chinese bluechips closed up 0.4 percent and close to 18-month highs as institutional investors stepped up purchases of big companies' shares. 

Oil prices dipped, adding to Friday's 2.5 percent fall, before a meeting of OPEC nations and other producers. Brent crude, the international benchmark, was down 12 cents at $47.94 a barrel. 

Ministers from the Organization of the Petroleum Exporting Countries and other non-OPEC producers will meet in St Petersburg to review market conditions and examine any proposals related to their pact to cut output. 

Sources familiar with the talks said the meeting may recommend a conditional cap on production from Nigeria and Libya - two OPEC members so far exempt from output cuts - although some analysts were sceptical the group would make such a move. 

The relatively weak dollar helped push copper close to its highest since March. The metal last traded 0.1 percent lower on the day at $6,003 a tonne. 

Gold hit its highest in four weeks and last stood at $1,254 an ounce, down 0.1 percent on the day.

Markets Setting Up for Another Great Buying Opportunity

Despite yesterday’s modest strength, we’ve got more downside on the open this morning as the markets were hit with some weaker than expected economic data.

ADP’s payroll change came in a little light at 158K when analysts were expecting 185K. Initial jobless claims came in slightly higher than expected at 248K when analysts were expecting 243K. All fairly normal these days, as it seems the country is approaching what economists consider to be full employment levels, but there’s no question underlying market technicals continue to be the main driver.

It’s just tough for these markets to instill confidence lately with tech continuing to lag the major averages. So, to re-iterate our recent analysis, we’re still looking for roughly 5,900 on the NASDAQ Composite. It would be a welcomed haircut though – one we’ve been anticipating for a while now.

Oil and gold were up modestly on the open, but no real change from our previous analysis there – we’re still convinced both are headed lower at some point over the next several days – despite any short-term strength. Assuming they do, they’d be getting closer and closer to levels we’ll ultimately find attractive.

Let’s just hope the major averages also find their way lower, because if it all coincides together, it could put the markets in a very strong position to rally heading into the upcoming earnings season, which is set to kick off here around mid-month.

We should also point out bonds have moved dramatically lower in recent days, something one might not have expected with stocks continuing to look suspect. However, that will change, because based on what we’re seeing in the bond markets, the recent selloff could merely be one that sets the stage for a reversal in bonds.

Provided here is a weekly chart of TLT, the primary ETF tracking the 20+ year treasury bond. As you can see, despite the recent move lower, the ETF has found itself below its 3X3 DMA (blue line) on two previous occasions, only to rally off those levels. And, if that ends up being the case this time around as well, we’re likely looking at a move to roughly $133 and change before bond investors could be in a position to start moving money back into stocks again.

The bottom line is stocks still appear suspect for the time being, despite the strength that continues to show up from time-to-time lately. Even the S&P 500′s recent rounding top pattern continues to suggest these markets want to work their way lower – and if it persists, we’re probably going to end up seeing the index down just below 2,400 on this daily chart here before the index could be in a position to stage another reversal back to the upside.

Market Weakness Puts Several Sectors at Key Pivot Points

In the meantime, if you haven’t already, you could enter into a bearish leveraged index ETF like SQQQ on a break below 6,140 (just below this morning’s low) on the NASDAQ Composite – in anticipation of a final move to just below the 5,900 level. Or, you could enter into the bearish ETF on any further relief to the upside.

Just be careful here though because we’re clearly at a major crossroads right now on a short-term basis. Meaning, if the NASDAQ is going to seriously stage a strong reversal back to the upside, it must do it now – and if it does we’ll keep a close eye on the breadth of the reversal.

You could also consider getting short oil if you’re not still short there via SCO or any other bearish oil instrument. Below is a daily chart of the price of light crude, and as you can see, oil got the anticipated relief rally we’ve been looking for over the last few days, but we still don’t believe oil is going to find its way much above roughly $45 and change before it should end up resuming its recent downtrend.

Not only would a clear break below $40 per barrel likely wash out enough bulls at some point, the fundamental landscape for the commodity down below $40 – and specifically right around $37 – would put the commodity in a position to start finding some legs back to the upside again.

As for gold, it’s interesting to point out even with this week’s strong move lower in equities, gold still can’t seem to find its footing, which further suggests our ultimate target on GLD of roughly $113 and change is still in the cards. Not only would that represent a complete 5/8th’s retracement on its daily chart you see here, the move – much like what would happen with oil – would likely be enough to wash out the bullish gold bugs down around that level on the primary ETF tracking gold.

DGLD or DUST would be the bearish leveraged ETF’s of choice if gold can ultimately find its way down to that $113 and change level on the daily chart of GLD above.

Major Indices Rally – Another Test Coming Soon

Off to another week of trading and once again we’re seeing more strength following last week’s volatility. All pretty normal for now, but we’ll see if the major indices can follow through on what we’re seeing today.

At this point, the NASDAQ continues to lag that of the S&P 500 and the DOW – with the latter two trying to make new highs already on the morning. However, considering the NASDAQ has been the clear leader for years now, it’s going to be the NASDAQ we’ll keep a close eye on early this week.

It’s still possible the S&P 500 can find its way to our near-term target of 2,500 first, but the NASDAQ is going to have to break convincingly above roughly 6,255 if we’re going to be convinced the index can continue its thrusting ways higher.

As you can see in this daily chart of the Composite below, we’ve pointed to this morning’s open, but it’s hard to see because it literally opened right smack on the 3X3 DMA (blue line). You can also see we’ve pointed to the 6,255 level, which is a very key short-term retracement level.

The bottom line is it will be that 6,255 level on the NASDAQ Composite we’ll keep a close eye on, because in the event the index breaks down around that level, it will suggest a potentially sharp move lower, despite the S&P 500 and the DOW’s strength lately.

Conversely, a sharp break above that level, and we’ll most likely get our 2,500 target on the S&P 500.
As it stands right now, we’d be very surprised not to see the NASDAQ find its way to that 6,255 level. But, it will be at that point we’ll want to see how the index reacts – especially now that we’re kicking off another new options period today.

Gold continues lower for the time being, and although we do still believe the primary ETF tracking gold in GLD is going to find its way down around roughly $113, it would be no surprise to see a relief rally any day now.

As you can see on this daily chart of GLD here, it’s been a miserable few weeks for the precious metal. However, with some very key displaced moving averages having already been taken out to the downside – and now that the ETF has found its way to a key retracement level – there’s a good chance gold will stage some sort of relief rally soon.

It would be on the heels of any sort of relief rally we’ll probably suggest a potential short via entering into DGLD or DUST, two primary bearish leveraged ETF’s tracking the price of gold and gold junior miners respectively.

As for oil, no real signs of any sort of significant strength yet, so we’re still convinced the price of crude will find its way to that $37 per barrel level. However, you can see in the daily chart here we’ve pointed to its previous short-term low, and considering it has gotten away from its 3X3 DMA (blue line) to the downside, a move back to the 3X3 DMA would be in order here. That would put oil somewhere right around $45 and change.

Much like gold, it would be on the retracement we’d consider traders get short oil via SCO or another bearish leveraged oil ETF, but if you’ve been short ever since we suggested it weeks ago, there’s no need to toy with the already profitable trade. Just make sure you trail your gains with a SSL that protects those gains, while still giving the idea some room to work for you.