AUSTRALIA DATA: Nov PMIs Up, Particularly Manufacturing, Services Jobs Moderates

Gold corrected on Tuesday as the double-digit rally this month drove profit taking and it could no longer ignore certain factors that would normally drive a pullback, including 2025 Fed easing is already priced in, there is talk that the US government shutdown could end this week and US-China trade tensions easing. Also it was in overbought territory and while yesterday’s 5.3% decline helps unwind some of that it remains overbought. The US dollar was also stronger (BBDXY +0.3%).

• Gold should continue to receive medium-term support from central bank and ETF buying as well as concern over large G7 government deficits, global uncertainty especially around tariffs and their impact which could include monetary easing. Lower rates benefit non-yield bearing gold.
• Traders are commenting that the lack of CFTC positioning data due to the US government shutdown is creating uncertainty around exposure size, according to Bloomberg.
• Gold trended lower through Tuesday to a low of $4082.03/oz before ending down 5.3% at $4125.22. It is slightly lower at the start of Wednesday’s trading at $4120.1, remaining below initial support at $4140.8, 15 October low, opening $4021.6, 20-day EMA.
• Silver followed gold declining 7.1% to $48.712 after an intraday trough of $47.891, below initial support at $49.089, 20-day EMA, opening $44.996, 50-day EMA. It is currently around $48.55. The white metal was also overbought and the correction marks the start of the unwinding of that condition.

• RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
• RES 2: 95.960 - High Apr 7 (cont.)
• RES 1: 95.900 - High Oct 17
• PRICE: 95.885 @ 15:18 BST Oct 21
• SUP 1: 95.510 - Low Sep 3  
• SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14 
• SUP 3: 95.275 - Low Nov 14  (cont) and a key support

Aussie 10-yr futures rallied further Friday, building on gains earlier in the week posted off the poor Australian jobs data. This further signals that the recent move lower is a correction. Near-term resistance has been cleared into 95.780, the Sep 12 high. The clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg. On the downside, key short-term support to watch has been defined at 95.510, the Sep 3 low. 

NZD/USD was little changed for Tuesday's session, and we track near 0.5740 in early Wednesday dealings, with the pair mostly supported post the Asia close yesterday. Recent ranges continue to hold, with upside focus on a test above 0.5760, while downside support still evident ahead of 0.5700. This did leave NZD outperforming further USD index gains (BBDXY up 0.30%), with JPY, along with CHF and AUD underperformers. Tuesday’s session was categorized by a sharp selloff for precious metals, with the significant 6% unwind for spot gold providing support for the greenback. 

• The metals move likely helped AUD/NZD move lower, providing some support for NZD, although the cross was still supported sub 1.1300 (last 1.1305/10).
• NZD/JPY surged above 87.00, tracking near the 200-day EMA resistance point (87.30) in latest dealings. Yen sank as new PM Takaichi pledged fresh fiscal stimulus.   
• Elsewhere in the cross asset space, US equities were mixed, while US Tsy yields stayed softer (the 10yr now down to 3.96%).
• NZ-US 2yr swap rate differentials are a touch higher, but at -86bps still remain close to recent cycle lows (just under -90bps).
• Overnight we had the whole milk dairy price auction, which showed priced continued to correct lower, now well off earlier 2025 highs. All else equal this does point to some downside risks for the Citi NZ terms of trade measure (albeit from elevated levels).
• The local data calendar is empty until next week's Sep jobs filled figures print.
• Note that we have the following option expiry for NY cut later: $0.5700(N$1.2bln).