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Market update: Nasdaq 100 up after support rejection, gold down despite collapse in US yields


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Nasdaq 100 edged up on falling US yields; gold dipped despite rate pullback. Attention now turns to US nonfarm payrolls.

 

original-size.webpSource: Bloomberg

 

 Diego Colman | Market Analyst, New York | Publication date: 

The Nasdaq 100 rebounded modestly on Tuesday following a subdued performance at the start of the week, supported by a significant drop in US treasury yields in the wake of unfavorable economic data. When it was all said and done, the equity index climbed 0.25%, settling above the 15,900 mark and approaching its 2023 highs.

To provide background information, bond rates fell across the board after October's US job openings figures, reported in the JOLTS survey, surprised to the downside by a wide margin. The disappointing results raised fears that the once indestructible labor market is beginning to crumble under the weight of aggressive monetary policy, which, in turn, boosted Fed easing wagers for 2024.

US JOLTS chart

 

original-size.webpSource: DailyFX

Gold struggles, Nasdaq cautious: eyes on key US employment numbers

Although the pullback in yields benefited the tech index, gold struggled to leverage the situation, with prices falling for the second day in a row. While the precious metal maintains a constructive outlook, bulls are not yet ready to re-engage long positions after getting caught on the wrong side of the trade on Monday, when the Asian session’s breakout quickly transformed into a large sell-off.

Looking ahead, we may see measured moves in gold and the Nasdaq 100 over the next couple of days as investors avoid making large directional bets ahead of the release of the November US employment numbers on Friday. The upcoming jobs report will provide valuable insight into the health of the economy and, therefore, may help guide the Fed's next steps.

Nasdaq 100 technical analysis

The Nasdaq 100 dropped sharply on Monday but selling pressure abated when the tech index failed to break below support at 15,700. From those levels, prices have mounted a moderate rebound, consolidating above the 15,900 mark. If gains accelerate in the coming days, resistance is visible in the 16,080 to 16,200 band. On continued strength, the focus shifts to the all-time high near 16,800.

Conversely, if sentiment swings back in favor of sellers and prices head south, the first important floor to watch is located around 15,700. Although this region might provide stability on a retracement, a breakdown could set the stage for a drop toward trendline support at 15,500. Moving lower, the next downside target would be the 100-day simple moving average.

Nasdaq 100 technical chart

 

original-size.webpSource: TradingView

Gold prices technical analysis

Gold surpassed its previous record, and briefly hit a fresh all-time high on Monday, but was quickly slammed lower, signaling that the long-awaited bullish breakout was nothing more than a fakeout.

Although the bulls may have thrown in the towel for now, bullion retains a constructive technical outlook. This means that the path of least resistance remains to the upside. That said, if the precious metal resumes its advance, the first barrier to watch looms at $2,050, and $2,070/$2,075 thereafter. Beyond this zone, attention turns to $2,150.

On the flip side, if losses intensify in the near term, initial support is positioned around $2,010. This area could act as a floor in case of additional losses, but a drop below it may be a signal that a deeper pullback is in gestation, with the next downside target situated near $1,990.

Gold price technical chart

 

original-size.webpSource: TradingView

 

 

 

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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