Gold Prices Break Below $1,800 As More Pressure Builds

 

Financial markets remain in a relatively tight range despite every day the markets looking a bit more stretched than yesterday. The reference is, of course, related to the stock market, as it remains elevated and finds buyers on every decline. 

The U.S. session brought yesterday similar price action as seen this week so far. Before the cash opens, the futures advance. Next, the cash opens, and the market declines, but only for a couple of hours or so before buying pressure builds, and the market closes near the day highs. This price action translates to the dollar and to other stock markets around the world.

In Europe, the Euro flirts with the 1.20 level against the dollar. It almost reached it yesterday, trading below 1.2030, but it found buyers for the simple reason that the move lower corresponded to 61.8% of the recent advance. Therefore, technical traders usually step in at the golden ratio, so there’s an explanation. Stock market indices follow the lead from the United States, with no other economic or political data to change the course of the action.

On the commodities front, things are more interesting. Gold continues its trend lower, despite Bitcoin rising. Also, crude oil holds above $60 and even made new highs today.

Daily Analysis

The day ahead looks like it will bring more of the same. Yesterday, the FOMC Minutes failed to bring anything new, so the market simply ignored the event. The same will likely happen today with the ECB monetary policy meeting accounts scheduled to be released later. On this front, traders should keep an eye on the EURUSD pair. A move below 1.20 should put pressure on the previous lows in the 1.1950 area, and that might change the game for the rest of the trading week.

Crude oil inventories in the United States are of particular importance today due to the power outages happening in America. Further decline would likely trigger a new leg higher on the crude oil price, although at the current levels, bulls should be cautious.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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