Are spot gold’s seasonals stronger than mining indexes? [Video]
(Giles Coghlan LLB, Lth, MA – HYCM)
There are different ways to trade gold markets and one way is to trade a gold mining index instead of, or as well as, spot gold. The reasons for gold’s upside since the last FOMC meeting have been the falling USD and Real yields which provides a good lift for gold. As long as investors continue to hold the view that the Fed will not need to hike rates aggressively into 2023 then gold should still be able to gain.
Notice that the seasonals indicate that buying gold provides the strongest seasonal pattern, beating Direxion’s gold mining DUST and NUGT indexes. Between July 26 and August 28 gold rose a total of 8 times over the last 10 years with a 28.47% annualised return.
Major trade risks: If inflation keeps edging higher then gold can fall lower again. Keep an eye on real yields and the USD to get a sense of gold’s direction.
EUR/USD: Downside risk with rebounds still on play
(Vasilis Tsaprounis – TopFX)
The pair is trading below the 1,0200 levels confirming once again the pattern of the last days.
As we mentioned on Monday, there are still reasons for the exchange rate to go and in both directions.
The euro during yesterday’s trading day was on the threshold of 1,03 level but failed to break upwards even temporarily. The scenario for a temporary breakout of the 1.0300 level and execution of ” stop loss ” orders was not confirmed.
The sellers of the pair maintain the advantage and despite the satisfactory reactions of the euro the momentum remains mildly bearish.
Important economic news we expect for today which can fuel some new direction but in general we do not expect any big surprises.
In general the reasons for the exchange rate to keep the last behavior are still on play and enhances the chances the pair will continuing to trade in a range trading environment.
Tensions between China and US remain at the fore, showing no signs of further escalation.
At the same time, Fed officials are trying to send messages that the US economy is not in danger of being in a recession and the scenario of a 50 basis point rate hike in September is the most likely.
Accordingly, we do not see any significant reasons to diversify the strategy of buying the euro in dips.
Daily recommendations on major – USD/JPY
USD/JPY – 133.21
Despite dollar’s resumption of recent decline from Jul’s 24-year peak of 139.39 to a fresh 7-week trough of 130.41 (Asia) yesterday, subsequent rally in New York on hawkish comments from Fed officials to 133.89 in Asia signals 1st leg of correction possibly over and would head towards 134.44.
On the downside, only below 132.88 would indicate aforesaid recovery over and risk re-test of 132.29, break, 131.60/65.
Data to be released on Wednesday
Germany exports, imports, trade balance, current account, S&P Global services PMI, Swiss CPI, France budget balance, S&P Global services PMI, Italy S&P Global services PMI, retail sales, EU S&P Global services PMI, producer prices, retail sales, UK S&P Global services PMI.
U.S. MBA mortgage application, S&P Global services PMI, durable goods, durable ex-defense, durable ex-transport, factory orders and ISM non-manufacturing PMI.