EM ASIA CREDIT: BDO Unibank (BDOPM): New USD deal priced

• MNI: JAPAN SEPT SERVICES PPI +3.0% Y/Y; AUG UNREV +2.7%
• JAPAN SEPT SERVICES PPI +0.1% M/M: AUG UNREV +0.2%

After a steady rally, gold prices were lower last week and have started Monday down further following news of a draft US-China trade deal with it expected to be agreed by Presidents Trump and Xi when they meet on Thursday. The likely agreement reduces trade-associated global risks and thus safe-haven holding of gold. US equity futures are rallying (S&P e-mini +0.7%) as the news drives stronger risk sentiment. 

• The agreement includes a year’s delay to China’s rare earths licensing regulations and should mean that the additional 100% US tariff won’t be imposed on November 1.
• Gold is down 1.2% to $4063.5/oz today, close to the intraday low, after reaching $4109.27 early in the session. Initial support is at $4004.3, 22 October low. Bullion remains overbought despite last week’s 3.3% correction.
• Prices fell to $4044.5 before the September US CPI data was released on Friday but then picked up close to $4140 following the lower-than-expected print. A 25bp rate cut on Wednesday is almost fully priced in.
• The US dollar index was slightly higher and yields lower on Friday but both were off their post-CPI lows.
• Silver rose to $48.705 at the start of Monday’s trading but has fallen to around $48.10. It was down 0.6% on Friday to be 6.3% lower last week, which is considered as corrective.
• The metal made a trough of $47.837 on Friday, holding above initial support at $47.550. The overbought trend condition has been partially unwound. It continues to trade below the 20-day EMA at $48.992 making a pullback toward the 50-day EMA at $45.417 possible. 

• RES 3: 140.08 High Jun 13 
• RES 2: 139.05 High Aug 4
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 136.07 @ 16:48 BST Oct 24
• SUP 1: 135.61 - Low Oct 08
• SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)
• SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)  

Prices surged last week, in sympathy with global bond markets, helping the price rally to a high of 136.64. This rally proved short-lived, however, as domestic fiscal concerns continue to weigh on prices. This affirms the firm downtrend that’s dominated prices since mid-September, and prices will need to challenge resistance before signaling any broader reversal. Key short-term resistance has been defined at 137.30, the Sep 8 high. The latest sell-off, however, resulted in a break of support at 136.19, the Sep 4 low and a bear trigger. Clearance of this level confirms a resumption of the downtrend and opens 135.39 next, a Fibonacci projection.