US Dollar up, Gold down, Stock in Freefall

US 10 Year Treasury Note at 1.37%

Market analyst – IFC Markets

With a sharp increase in the USD price and US 10 Year Treasury Note, gold lost more than 2%, to touch the 1,793 and hold its downtrend to print its sharpest decline in nearly a month. 

This is the reaction which we were waiting to see in case of positive employment numbers, however, as it seems, market participants, ignoring the employment data. 

With the weakest performance of employment numbers, US published data on Friday shows only 235K new jobs, comparing 750K market expectations. After the report, Gold touched its more than 30-day high, however, at the beginning of the week, investors changed their focus to inflation numbers than employment data, to send the US Dollar again to higher levels, increase the market risk, and create a free fall in Gold and Stock Markets. 

At the time of writing, at the beginning of the US cash market, Dow Jones losing more than 0.7%, SP 500 is down more than 0.3%, but NASDAQ is up by 0.1%. 

Gold is down, as fears of higher inflation increased both US dollar and Bond Yields. Investors expect a sharp rebound in the USD chart for this week. Also, according to the latest data, total ETF gold holdings at the end of last week were 6.8% lower on the year, which shows less interest for Gold investments. Chinese official gold holdings also are lower by 0.6% in August versus July. 

To be honest, the Gold market is very confused and investors are more confused even with current economic data. Some investors believe in continuing the stimulus, and other groups believe that it must be time to start tapering. 

While technically we are in the overall uptrend, in the short-term downtrend which is mostly caused by profit-taking, we can see the RSI under 20 with a flat OBV line at its end. Technical indicators signaling a possible correction down there. However, currently, 1,808 is the key level, where we can find the next direction by trading under or above that. 


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