GOLD TECHS: Bullish Trend Structure

• RES 4: $4443.8 - 3.618 proj of the May 15 - Jun 16 - 30 price swing
• RES 3: $4404.9 - 3.500 proj of the May 15 - Jun 16 - 30 price swing 
• RES 2: $4400.0 - Round number resistance
• RES 1: $4161.4/4381.5 - High Oct 22 / High Oct 20 and bull trigger                
• PRICE: $3932.5 @ 07:34 GMT Oct 28
• SUP 1: $3900.0 - 38.2% retracement of the May 15 - Oct 20 bull leg  
• SUP 2: $3838.2 - 50-day EMA
• SUP 3: $3819.6 - Low Oct 2
• SUP 4: $3751.3 - 50.0% retracement of the May 15 - Oct 20 bull leg

Gold is trading lower as it extends the bear cycle that started Oct 20. Note that the trend is overbought and a deeper retracement is allowing this condition to unwind. Support at the 20-day EMA, at $4045.9, has been breached, signalling scope for a deeper retracement, towards the 50-day EMA, at $3838.2. Key resistance and the bull trigger has been defined at $4381.5, the Oct 20 high. Initial resistance is at $4161.4, the Oct 22 high.

The FT reported yesterday evening that the OBR is expected to cut its trend productivity forecast by 0.3pp in its upcoming Economic and Fiscal Outlook (released alongside the Nov 26 budget), larger than the 0.1-0.2pp that had been expected by most analysts/independent forecasters. The article is here

• The IFS’ Green Budget (here) estimated that each 0.1pp downgrade to productivity would increase 2029-2030 PSNB by GBP7bln, so this downgrade implies a GBP21bln hit to public finances. A reminder that the YTD tracking error with existing OBR projections is also GBP7.23bln.
• This productivity downgrade lends support to reports suggesting the Chancellor is looking to break Labour’s election manifesto pledge and raise income tax at the budget.
• More disappointment for the Chancellor has come from the Treasury Committee, who suggested any growth impulse from the UK’s National Wealth Fund will be limited due to its small size: “The current NWF’s size could limit its strategic impact on economic growth”…. “Its ambitions to deliver significant regional and economic growth are likely to be very challenging.” (via BBG)
• A reminder that the Chancellor is hoping that factors such as lower borrowing costs (which crucially will depend on the 10-day window the OBR uses to base its projections on), growth-friendly policies (e.g. trade deals, planning reforms) and faster-than-expected spot growth will provide some offset to the fiscal hit from the productivity downgrade. 

• RES 4: 180.96 Top of a bull channel drawn from the Feb 28 low  
• RES 3: 180.00 Psychological round number
• RES 2: 178.94 1.236 proj of the Jul 31 - Sep 29 - Oct 2 price swing
• RES 1: 178.23 High Oct 27 / Record High  
• PRICE: 177.37 @ 07:22 GMT Oct 28
• SUP 1: 176.02 20-day EMA
• SUP 2: 174.82/42 Low Oct 17 / 50-day EMA 
• SUP 3: 173.92 Low Oct 6 and a gap high on the daily chart   
• SUP 4: 173.24 High Oct 3 and a gap low on the daily chart 

The trend structure in EURJPY is bullish and Monday’s gains reinforce current conditions. The cross has cleared key resistance and the bull trigger at 177.94, the Oct 10 high, hitting new record highs in the process and this confirms a resumption of the primary uptrend. 178.94, a Fibonacci projection, is the next key upside level. First key support to watch lies at 176.02, the 20-day EMA. Support at the 50-day EMA is at 174.42.