News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Real Time News
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/QqlZ2dQgVv
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/lvIUu5FHoq
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/bpKdIqGxsn
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/jmcAIW4w5k
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/M9isuvnzqF
  • The British Pound is giving back some of its multi-month gains with some pairs testing notable support despite a positive fundamental backdrop. Get your market update from @nickcawley1 here: https://t.co/6Ct5R0H41F https://t.co/c4rXmMjMrv
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here: https://t.co/lgDf5cVYOn https://t.co/4dhCP5pnxM
  • Gold is facing the neckline of a Double Bottom Pattern after bouncing off a confirmed longer-term trendline. Is a bullish reversal in order? Get your market update from @FxWestwater here: https://t.co/kLXZewWBMd https://t.co/w1Nu0z569m
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here: https://t.co/8G8mUX4so6 https://t.co/Gn41XsGktg
  • Rollover is the interest paid or earned for holding a currency spot position overnight. Learn how to earn rollover interest on your open positions here: https://t.co/SRsG8CxjEn https://t.co/2AR1qgx0tz
Gold Looks to US Inflation Bets, Dollar Price Action for Direction

Gold Looks to US Inflation Bets, Dollar Price Action for Direction

Ilya Spivak, Head Strategist, APAC

Talking Points

  • Crude Oil May Pull Back but Bias Favors the Upside on Iran Tensions
  • Gold Looks to US Inflation Outlook, Dollar Price Action for Direction
  • Copper at Risk on Risk Aversion But Reports of Shortage May Support

Tensions with Iran continue to inject a considerable geopolitical risk premium into crude oil prices, with the WTI contract touching an 8-month high yesterday. The latest bit of escalation came after talks between Tehran and IAEA came apart after the government refused to allow inspection of a site in Pachin reported to be testing explosives.

Technical positioning warns a pullback may be ahead however (see below), hinting the recent batch of supportive news-flow has been priced in already. Still, with Iran reportedly starting to conduct civilian defense drills in preparation for armed conflict, the satiation is unlikely to be defused quickly (if at all) so the path of least resistance continues to broadly favor the upside.

Gold prices jumped to the highest in 3 month yesterday on the back of a widely-circulated Financial Times article that claimed the Federal Reserve will extend the so-called “Operation Twist” stimulus program beyond June. The scheme has the Fed selling shorter-term assets on its balance sheet in exchange for further-dated ones to target a decline in the long-term borrowing costs. Bloomberg News also cited sources saying buying by automated trading systems buoyed prices.

Looking ahead, strong correlations between precious metal prices US inflation expectations (measured by “breakeven rates”, the spread between nominal and inflation-linked Treasury bond yields) puts the spotlight on US jobless claims and House Price Index figures due today. An overnight pullback in the US Dollar may also emerge as a supportive factor, although a sudden downward reversal in S&P 500 stock index futures in early European trade may reboot safe-haven demand for the greenback to the detriment of both gold and silver. The selloff appears to have followed an EU Commission report forecasting the regional bloc’s collective economy will shrink 0.3 percent in 2012 (compared with previous estimates of a 0.5 percent expansion).

The emerging adverse reversal in risk appetite trends likewise bodes ill for Copper prices. The metal remains highly sensitive to global economic growth expectations, meaning the return of slowdown fears is likely to be a considerable headwind. Selling pressure may be at least partially offset near-term however amid reports that production lagged demand by the largest margin (119,000 metric tons) in November, according to ICSG.

WTI Crude Oil (NY Close): $106.28 // +0.44 // +0.42%

A candle in Star position below resistance at 106.81, the 138.2% Fibonacci extension,gives early warning thata pullback may be ahead. Initial support lines up at 105.61, the 123.6% Fib. A break lower exposes the January 4 swing high at 103.66.

Gold_Looks_to_US_Inflation_Bets_Dollar_Price_Action_for_Direction_body_Picture_3.png, Gold Looks to US Inflation Bets, Dollar Price Action for Direction

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1776.22 // +17.10 // +0.97%

Prices continued higher after putting in a Bullish Engulfing candlestick pattern above support 1714.60, breaking resistance at 1763.00. The bulls now aim to challenge the November 8 high at 1802.80, although early signs of negative RSI divergence hint upward momentum may not prove long-lasting. The 1763.00 level has been recast as near-term support.

Gold_Looks_to_US_Inflation_Bets_Dollar_Price_Action_for_Direction_body_Picture_4.png, Gold Looks to US Inflation Bets, Dollar Price Action for Direction

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $34.27 // -0.04 // -0.12%

Prices are testing above range resistance at 34.37, the February 2 swing high, with an upward breakout exposing the 35.30-66 area. For now, support remains at 32.60, the 23.6% Fibonacci retracement level, though a confirmed upward piercing of 34.37 on a daily closing basis would recast that level as the immediate downside barrier.

Gold_Looks_to_US_Inflation_Bets_Dollar_Price_Action_for_Direction_body_Picture_5.png, Gold Looks to US Inflation Bets, Dollar Price Action for Direction

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.834 // -0.002 // -0.05%

Prices have paused after taking out resistance at 3.789 (now acting as near-term support). Renewed upward momentum initially targets 3.909. Alternatively, a break back below 3.789 sees rising trend line support at 3.720.

Gold_Looks_to_US_Inflation_Bets_Dollar_Price_Action_for_Direction_body_Picture_6.png, Gold Looks to US Inflation Bets, Dollar Price Action for Direction

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES