Gold shines bright, but faces big barrier on the charts
U.S. equity index futures rise slightly: Nasdaq 100 up ~0.4%
Aug National Activity Index +0.12 vs -0.34 prior
Euro STOXX 600 index up ~0.4%
Dollar, crude, gold, bitcoin all up
U.S. 10-Year Treasury yield rises to ~3.77%
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GOLD SHINES BRIGHT, BUT FACES BIG BARRIER ON THE CHARTS
Gold hit a fresh record high on Monday, driven by the momentum generated by the Federal Reserve's interest rate cut and safe-haven demand due to geopolitical risks in the Middle East.
Indeed, spot gold XAU= traded as high as $2,631.31. However, amid dollar =USD strength, it has since slipped back to around $2,625. Gold is now up around 27% YTD.
Of note, however, the yellow metal is facing a big test at a barrier in the form of a log-scale resistance line from 1980 that resides around $2,725 this month, or about 4% above current levels:
With this, the 14-month Relative Strength Index (RSI) is now around 80.00, or its most overbought reading since August 2020. Back then, gold was reversing from a record high prior to a more than 22% slide into its September 2022 low.
The RSI also stalled in August 2011 around the 80.00 level. One month later, in September, gold topped ahead of a 46% collapse into its December 2015 low.
Add in what now appears to be bloated non-commercial (large speculators) net-long positioning, highest since 2020, and risk for a surprise reversal in gold may be building.
Meanwhile, the NYSE ARCA gold bugs index .HUI, a basket of gold mining companies, including Barrick Gold GOLD.N and Newmont Mining NEM.N, is up just over 35% YTD vs an S&P 500 index .SPX gain of about 20% in 2024.
That said, the S&P 500 hit new highs last week, while the HUI is still down nearly 50% from its record high seen in 2011.
(Terence Gabriel)
*****
FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
GLOBAL ECONOMY IN "FINAL CHAPTER OF POST-PANDEMIC ADJUSTMENT" - CITI - CLICK HERE
AUTOS: BRUSSELS SEEN BRINGING CARBON TARGET RELIEF - CLICK HERE
DRAGHI’S PLAN IS DESIGNED FOR GERMANY – TS LOMBARD - CLICK HERE
DEFENSIVES HELP THE STOXX, LUXURY DOWN - CLICK HERE
EUROPEAN FUTURES EDGE HIGHER - CLICK HERE
COUNTING ON MORE RATE CUTS CLICK HERE
Gold09232024 https://tmsnrt.rs/3Xxm9bT
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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