GOLD TECHS: Corrective Bear Cycle

• RES 4: $77.75 - High Jan 20  
• RES 3: $76.26 - High Feb 20
• RES 2: $70.36/75.47 - 50-day EMA / High Apr 2 and a bull trigger
• RES 1: $67.95 - Low Mar 5            
• PRICE: $63.95 @ 07:09 BST Apr 16  
• SUP 1: $58.40 - Low Apr 9    
• SUP 2: $58.85 - 2.000 proj of the Feb 20 - Mar 5 - Apr 2 price swing
• SUP 3: $56.89 - 2.236 proj of the Feb 20 - Mar 5 - Apr 2 price swing
• SUP 4: $55.00 - Round number support

Brent futures continue to trade above the Apr 9 low. For now, the latest bounce is considered corrective and this is allowing a recent oversold condition to unwind. The primary trend direction remains down and a resumption of weakness would open $56.89, a Fibonacci projection. On the upside, initial firm resistance to watch is seen at $67.95, the Mar 5 low. Resistance at the 50-day EMA, is at $70.36.

ASB revised up its Q1 CPI forecast by 0.1pp to 0.9% q/q & 2.5% y/y following the “firmer” March price data to be slightly higher than the RBNZ’s February forecast of 0.8% q/q and 2.4% y/y and a pickup from Q4’s 0.5% q/q & 2.2% y/y. Monthly price data are worth 45% of the CPI. It believes that headline inflation will peak below the RBNZ’s expectation of 2.7% in Q3, which should allow it to ease below the estimated 3% neutral level given recent global developments.

• ASB continues to forecast three 25bp rate cuts with the OCR reaching 2.75% by August 2025 with the chance that “a prolonged trade spat could deliver collateral damage to the NZ economy and may prompt further policy support from the RBNZ”.
• However, the medium-term “inflation outlook is inherently uncertain, further complicated by pronounced uncertainty over the impacts of the worsening global trade ructions”.
• Q1 core inflation should also ease. “We expect annual inflation from the sectoral inflation model to ease to 3% (or slightly lower) in the March 2025 year (from 3.1% in Q4), its lowest since mid-2021.”
• “Non-tradables prices are expected to rise 0.9% in Q1, with annual non-tradables inflation to drop to 3.8%, the lowest in close to 4 years. The moderation in domestic inflation is expected to be generalised.”
• “Residual pricing pressures remain evident in some components. Still-chunky increases are expected for insurance costs, with sizeable rises for some services. … Wider services price inflation is expected to gradually decelerate as capacity pressures subside.”
• “Increases in food and fuel prices will only be partly offset by falls in international airfares and overseas accommodation.”
• “Stats NZ will also be reviewing the expenditure weights in the March 2025 quarter. … We don’t envisage substantive changes in the Q1 2025 CPI data.”

• RES 4: 5270.00 High Apr 1  
• RES 3: 5131.98 50-day EMA 
• RES 2: 5001.00 High Apr 9
• RES 1: 4998.90 20-day EMA              
• PRICE: 4824.00 @ 07:01 BST Apr 16 
• SUP 1: 4664.00 Low Apr 10                      
• SUP 2: 4575.45 76.4% retracement of the Apr 7 - 9 bounce
• SUP 3: 4444.00 Low Apr 7 and the bear trigger         
• SUP 4: 4336.00 Low Nov 28 ‘23 (cont)     

Eurostoxx 50 futures continue to trade above their recent lows. The latest bounce highlights a corrective cycle and if this is correct, marks an unwinding of the recent oversold trend condition. Resistance levels to watch are 4998.90, the 20-day EMA, and 5131.98, the 50-day EMA. Key support and the bear trigger has been defined at 4444.00, the Apr 7 low. A break of this level would confirm a resumption of the downtrend.