GOLD: Gold - Momentum Stalling Just Below $4650/oz
The range overnight for gold was $4,599.80/oz - $4,642.98/oz, Asia is currently trading around {XAU Curncy}. Gold has struggled to maintain its acceleration higher, having stalled just below 4,650.00/oz the last couple of days. This morning we are seeing what looks to be some profit talking in silver which has gone parabolic and this is dragging gold down with it. Metals have been on a meteoric rise in the last quarter of last year and started the year in a similar vein as the “debasement trade” seems to be growing in popularity. It is always very hard to call a top in any asset moving with the velocity metals are but it is certainly looking stretched and prudence is warranted. Initial support lies back toward the $4,500oz area; but we could easily see a pullback to the $4,250-$4,400/oz support zone and still be in a very strong uptrend. If you are long the trend is your friend but I would be wary initiating a long up these levels.
- Gold Telegraph on X:“World economies and financial systems aren’t on a solid footing… smart money understands that and has moved more smartly towards gold. Gold has evolved from a trading instrument into a must-have investment vehicle, the real bottleneck in critical minerals is processing capacity.”
- Gold Telegraph Conversation with Sean Boyd, former CEO and current Chair of @agnicoeagle one of the world's leading gold producers. https://x.com/GoldTelegraph_/status/2002112442600456222?s=20
- The XAU Average True Range(ATR) for the last 10 Trading days: $74.68
Fig 1 : Gold Hourly Chart
Source: MNI - Market News/Bloomberg
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CROSS ASSET: US Equity Futures Weaker, Risk Off In G10 FX Space
US equity futures are down noticeably in the first part of Tuesday trade. There doesn't appear to be a fresh catalyst in terms of news flow so far today driving the move. We do have important US data later (payrolls and retail sales out), with markets potentially lightening risk ahead of these prints. The tech side is again leading. Nasdaq futures were off over 0.80% a short while ago, but now sit slightly firmer (last -0.50%, while Eminis are down 0.50%), We are under the 50-day EMA for Nasdaq futures, but above 100-day EMA support, see the chart below. Nov's dip under the 100-day EMA ultimately proved a good buying opportunity.
- In Asian equity markets, tech related indices are weaker, the Kospi off over 1.5%, while Japan markets are down over 1%. China's MSCI index is now down 10% from the Oct 2 high. Markets in SEA, rest of Asia Pac are down more modestly, or slightly higher.
- Bitcoin is also weaker, although only down marginally, at -0.30% (last under 86k). Yen and CHF are outperforming in the G10 FX space, while AUD and NZD are down around 0.30% each. AUD/JPY is nearing 102.50.
- US Tsy yields are lower, but losses aren't beyond 1bps at this stage.
Fig 1: Nasdaq Equity Futures Versus Key EMAs
Source: Bloomberg Finance L.P./MNI
JGBS: Little Changed Ahead Of This Week's Expected BOJ Hike
In Tokyo morning trade, JGB futures are little changed, -2 compared to settlement levels.
- The BOJ is widely expected to raise its policy interest rate by 25 basis points to 0.75% at the upcoming December 18–19 Monetary Policy Meeting. Governor Kazuo Ueda has recently taken a more open approach to communications, signalling growing confidence in the BOJ’s outlook for economic activity and prices. In a speech on 1 December, he noted that “the likelihood of the baseline scenario for economic activity and prices being realised is gradually increasing,” and highlighted that the BOJ is independently gathering information on the early momentum of the spring labour–management wage negotiations.
- Policy Board members Junko Koeda and Kazuyuki Masu have also indicated that “the conditions for a rate rise are gradually falling into place.”
- Cash US tsys are ~1bp richer in today's Asia-Pac session ahead of Tuesday's heavy data schedule that includes headline NFP for November, weekly ADP, Retail Sales and S&P Global flash PMIs.
- Cash JGBs are little changed across benchmarks out to the 20-year, and 1bp richer (30-year) to 1bp cheaper (40-year) beyond. The benchmark 10-year yield is 0.6bps higher at 1.962% versus the cycle high of 1.976%.
- Swap rates are little changed.
Source: Bloomberg Finance LP
US TSYS: Yields Continue to Drift Lower, TYH6 Wedged Between Key Tech Levels
US treasury futures began the trading day stronger in Asia but have failed to follow on with further gains. The US 10-Yr opened up +02 at 112-11+ and remains there towards the end of the morning session. TYH6 is wedged between its 100-day EMA of 112-14+ as topside resistance and the bottom side resistance of the 200-day EMA at 111-30.
Cash has a bid tone to it with 5-Yr + maturities lower in yield whilst the front end is unchanged.
- The 2-Yr is at 3.504%
- The 5-Yr is at 3.723% : -0.3bps
- The 10-Yr is at 4.17% : -0.6bps
- The 30-Yr is at 4.842% : -0.5bps.
Tonight there is a US$75bn 6-week auction as the primary focus.
