Technical Analysis

Dollar higher, stocks lower and gold heading lower

Stocks off to a weak start 

The Asian equity markets are moving lower and the US futures markets are also weaker. The weakness in equities is helping to strengthen the US dollar, and with those gains, sending gold lower.  Fundamentally, the markets are concerned about the US stimulus deal.  A news story that Russia and Iran were interfering in the US election also has traders on edge. 

 Looking at the strongest to weakest currency rankings, the USD is taking the lead to the upside with gains against all the major currencies. The AUD is the weakest with risk off flows.

Looking at the hourly chart of gold (see chart below), the price has been pushing to the downside as the dollar moved higher in early Asian trading. The move is erasing part of the gains seen from yesterday’s trade. That moved to the upside stalled at $1931.38. That was just short of the October high price reached on October 12 at $1933.28. The inability to extend above that high initially helped reverse the precious metal back to the downside.

The extension to in early trading today has the pair looking back toward a potential test of the 50% retracement of the move down from the September 16 high at $1911.27. Also key for the technical bias are the converged 100 and 200 moving averages at $1909.50. Those levels - although still $5-$7 away - our key targets for both the bulls and bears. If the price can stay above, the buyers hold more control. If the price moved below, the bias tilts back to the downside.

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