Two trades to watch: Gold, FTSE

Gold declines on US Dollar strength post FOMC minutes, but COVID concerns cap losses. FTSE set for a weaker open as commodity stocks prepare to tank on USD strength & covid woes.

Gold 1

Gold falls post FOMC minutes, covid fears cap losses 

Gold is trading lower after buying picked up in the US Dollar following the release of the FOMC minutes. 

The minutes showed that the US central bank could start tapering bond purchases later this year. There were also some policy makers who preferred next year as a starting date but the market decided not to focus on that. 

Evidence that the market is now convinced that the Fed is comfortable with tapering support was seen in follow through buying of the US Dollar in Asia overnight & heading into the European open. 

Still persistent COVID concerns appear to have prevented investors from placing aggressive sell bets in the precious metal. 

US jobless claims are in focus late today. 

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 Where next for Gold? 

Gold rebounded off the 4-month low of $1679 on August 9. However, the recovery ran into resistance at the 50 dam which capped any move higher. 

The price trades below its 50 & 100 sma and below its descending trendline dating back to early June in an establish bullish trend.   

The 50 sma also crossed below the 100 sma in a bearish signal. Furthermore, the RSI has reversed direction and is in bearish territory pointing southwards suggesting there could be more downside to come. 

Support can be seen at 1750 the June low, ahead of 1730 the April low before bears could look to retest 1679 the August low. 

On the upside any recovery needs to close above the 20 sma at 1788 in order to test the 50 sma at 1795 and the ascending trendline at 1813. 


FTSE tumbles as miners, oil major sink lower 

The FTSE is set to start the session firmly in the red following the more hawkish FOMC minutes and on rising covid fears  

The Fed minutes sent the US Dollar surging higher, which has dragged commodity prices sharply lower. The heavyweight mining stocks on the FTSE are in for a beating today. 

Oil prices are also sharply lower, not only owing to the stronger US Dollar but also on climbing virus fears. Rising US inventories have fueled fears of weaker demand amid a spike of covid cases globally. 

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Where next for the FTSE? 

The FTSE’s rebound across the first half of the week stalled and is reversing. The price trades firmly below its 10 day descending trendline and has fallen below its 50 & 20 sma on the 4 hour chart. The 20 sma has also fallen below the 50 sma in a bearish signal. 

The RSI is indicative of further losses whilst it remains out of oversold territory. 

The price has fallen below horizontal support at 7090 the low August 9 and is heading towards 7000 key psychological level and 6995 the swing low July 30 and 6930 the low July 27. 

On the flipside, resistance can be seen at 7080 the August 9 low and 7111 the August 17 low ahead of 7150 the 20 sma. 


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