enDaily Analysis 05/11/2024
Latest Economic and Fundamental Insights
The dollar index traded around 103.9 on Tuesday, holding onto losses from the previous session as uncertainty over the outcome of the U.S. presidential election prompted traders to unwind some “Trump trading” positions.
Gold steady, focus on US elections
Uncertainty surrounding the election has driven gold prices higher recently, supported by speculation that a Trump presidency could lead to higher inflation due to his commitment to significantly raise trade tariffs.
This has encouraged investors to use gold as a hedge against long-term inflation risks.
However, the fierce competition between the competitors has tempered these expectations.
Markets are also awaiting the Federal Reserve’s monetary policy announcement on Thursday, with markets widely expecting a quarter-point rate cut.
This proposition is supported by gold bullion, as low interest rates reduce the opportunity cost of holding non-interest-bearing gold bullion.
Moreover, expectations of interest rate cuts by other major central banks provide further support to gold’s appeal.
Gold prices stable amid caution
Gold prices are steady in early Asian trading amid caution ahead of the US elections later today and the Federal Reserve’s interest rate decision this week.
-The latest polls suggest a potential Harris win would weigh on the dollar and provide some support to the precious metal. Meanwhile, the Federal Reserve is widely expected to cut interest rates when it meets later this week.
Gold has historically underperformed after the US election due to fading demand for hedging. However, they believe “the structural gold bull market remains intact and recommend buying on dips.”
Stock markets moved sideways and currencies and bonds were cautiously quiet as investors waited for the United States to choose a new leader, with opinion polls showing the race on a knife’s edge.
-Bitcoin price struggles below $69,500. Bitcoin is showing signs of weakness and gains could be limited to $69,200.
Oil trades in a narrow range ahead of the US elections, with Brent crude trading at $75.00 and WTI at $71.00.
“We are now in the calm before the storm,” said Tony Sycamore, market analyst at IG.
Oil prices were supported by the announcement on Sunday by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, that they would delay raising production by a month from December as weak demand and rising supplies from outside OPEC slowed markets.
However, risk appetite remains limited with a busy week — including the U.S. election, the Federal Reserve’s policy meeting and China’s National People’s Congress meeting — keeping many traders on the sidelines, said Yip Junrong, market strategist at IG.
-Yip added that opinion polls currently indicate that the US presidential race will be very close, and that any delay in the election results or even disputes could pose or prolong near-term risks to the broader markets.
“All eyes are also on the NPC meeting for any clarity on fiscal stimulus to lift the country’s demand outlook, but we are unlikely to see any strong commitment before the US presidential election results, which should continue to keep oil prices in a waiting game in the near term,” Yip said.
Meanwhile, OPEC oil output rebounded in October as Libya resumed production, a Reuters survey showed, although further Iraqi efforts to meet pledged cuts to the broader OPEC+ alliance capped gains.
More oil could come from OPEC member Iran after Tehran agreed to a plan to boost output by 250,000 barrels per day, the Iranian oil ministry’s website said on Monday.
In the United States, researchers said a late-season tropical storm expected to strengthen into a Category 2 hurricane in the Gulf of Mexico this week could cut oil production by about 4 million barrels.
-Bitcoin price struggles below $69,500. Bitcoin is showing signs of weakness and gains could be limited to $69,200.
Smart technical reports
How they work
A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.
If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.
The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.
These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.
GOLD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 2734.23
Scenario 1: Buy gold with a break and stability above 2744.65, targeting 2751.08 and 2758.21
Alternative scenario: Sell gold with a break and stability below 2733.27 with a target price of 2726.82 and then 2718.98
Comment: Trading above the supports and averages suggests an upward trend.
CRUDE OIL
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: $71.22 per barrel
Scenario 1: Buy oil by breaking the $71.60 level, targeting $72.07 and then $72.63.
Alternative scenario: Sell oil with a break and stability by closing a candle below the $70.92 levels, targeting $70.40 and then $69.81
Comment: Trading above the supports and averages suggests an upward trend.
EURUSD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.08745
First scenario: Buy the Euro-Dollar by breaking 1.08903, targeting 1.09087 and then 1.09312.
Alternative scenario: Sell the EUR/USD with a break and stability with a candle closing below 1.08675, targeting 1.08515 and then 1.08302.
Comment: Trading below the resistances and averages suggests a decline.
GBPUSD
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.29550
Scenario 1: Selling the pound dollar with a break and stability below the level of 1.29412, targeting the price of 1.29172 and then 1.28950
Alternative scenario: Buy the pound dollar with a break and hold with a close above 1.29713, targeting 1.29953 and then 1.30240.
Comment: Trading below the resistances and averages suggests a decline.
NAS100
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 20084
Scenario 1: Selling the Nasdaq with a break and stability with a close below 20014, targeting a price of 19890 then 19882
Alternative scenario: Buy Nasdaq with a break and hold with a close above 20171 with a target price of 20274 then 20392
Comment: Trading below the resistances and averages suggests a decline.
Economic Calendar
(Times are in GMT+3)
-From Australia Reserve Bank of Australia interest rate decision (November) 6:30
-From USA US presidential election 13:00
-From USA Services PMI (October) 17:45
-From USA ISM Non-Manufacturing PMI (October) 18:00
Fundamental Analysis
The dollar index traded around 103.9 on Tuesday, holding onto losses from the previous session as uncertainty over the outcome of the U.S. presidential election prompted traders to unwind some “Trump trading” positions.
Recent polls suggest a closer race between Kamala Harris and Donald Trump than initially expected, with market attention also focused on which party controls Congress, where a big win could lead to major changes in spending and tax policies.
On the monetary policy front, the US Federal Reserve is widely expected to announce a more cautious 25 basis point interest rate cut on Thursday, as it tries to strike a delicate balance between persistent inflation and a slowing labour market.
Markets are also pricing in another quarter-point rate cut in December.
Gold held above $2,730 an ounce on Tuesday, remaining flat as markets prepared for the U.S. presidential election later in the day.
Oil prices traded in a narrow range on Tuesday ahead of what is expected to be an exceptionally close U.S. presidential election, after rising more than 2% in the previous session as OPEC+ delayed plans to boost output in December.
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