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10/06/21 11:53
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Gold price holds steady, oil bounces, but platinum remains under pressure Gold has been little-affected by the volatility in stocks, while oil prices have regained some ground. Platinum, meanwhile, remains under pressure. Source: Bloomberg Commodities Gold Recession Platinum Price of oil Oil Chris Beauchamp | Chief Market Analyst, London | Publication date: Thursday 19 May 2022 Gold calm despite renewed risk-off moves The sudden drop in stocks yesterday does not appear to have provided much of a lift for gold, which has remained around yesterday’s levels without much of a bounce. Indeed, attempts at a bounce appear to have stalled entirely, with little appetite to even test the highs seen at the beginning of the week. Of course, the stronger dollar plays a big part here, as high inflation readings drive investors to the greenback in the expectation that the tightening of monetary policy in the US will be an extended process. As a result gold is out of favour, ignored in the rush to move into higher-yielding bonds at the very moment when it might have been expected to shine. Admittedly the bearish case hasn’t got much traction here either, with little inclination evident at present to move lower towards $1800 and then $1780. Meanwhile, a sustained bounce requires the price to move back above $1836, Tuesday’s high, and then move on above the 200-day simple moving average (SMA) which is currently $1837. Source: ProRealTime Brent crude hovers above 50-day MA Two days of losses have stalled here, as buyers attempt to move back into oil. The battle of the supply and demand outlooks continues, with the latter and its expected weakening of global demand holding sway over the previous two days. Expectations of weaker growth across the glove, and even a recession, have meant that the bull case for oil has taken a knock, even with expectations of a European ban on Russian imports providing support to the price. Price action this week has seen Brent unable to push on through the area of resistance around $114. The price needs to clear this to open the way to $120.50, the high from late March, and then above this the February peak at $131 comes into view. Sellers will look to push the price back to $101.50 and then the $99.20 support zone, which has held since early April. Source: ProRealTime Platinum prices slump once again Expectations of strong supplies of platinum continue to drive the price lower, reinforced by the more negative economic outlook. As with other risk assets, platinum has been under pressure as forecasts of economic growth are revised down, while the dollar’s strength provides another driving factor for losses. The slump over the past week has seen the price falter at the 50-day SMA, and it is now on the cusp of returning to the support zone around $915. Additional declines below this level would bring the lows of late 2020 into view around $840. Source: ProRealTime -
European indices open lower after worst Wall Street rout in two years Technical outlook on FTSE 100, DAX 40, and Dow after disappointing US retailers’ earnings. Source: Bloomberg Indices Dow Jones Industrial Average Market sentiment Inflation /business/market_index FTSE 100 Axel Rudolph | Market Analyst, London | Publication date: Thursday 19 May 2022 FTSE 100 drops as inflation hits 40-year high The FTSE 100’s 5% rally from last week’s 7,157 low, made close to the February low amid volatile trading due to recession fears, abruptly ended yesterday as the UK annual inflation rate rose to a 40-year high of 9% in April, up from 7% in March. The 200-day simple moving average (SMA) at 7,324 may act as support today, together with the 7,299 April low. While this is the case, the 55-day SMA at 7,423 may be revisited. Only a rise above yesterday’s high at 7,545 would push the 7,621 early May high back to the fore. Above this level key resistance remains to be seen in the 7,657 to 7690 region which is made up of the January 2020, February, and April highs and as such is likely to cap. Source: ProRealTime Bearish Engulfing day points to lower levels The DAX 40’s 6% recovery rally from last week’s 13,275 low, triggered by investors buying stocks at discounted levels in sectors such as commodities, healthcare and utilities, came to a sudden end yesterday when a Bearish Engulfing pattern was formed on the daily candlestick chart. This occurs when the red (bearish) body of the candle – the distance between the open and close of that day – “engulfs” the previous day’s body. Further slips are thus in store with the April low at 13,538 representing a possible downside target. Below it the three-month support line can be found at 13,410 and the current May low at 13,275. While the index remains above this month’s low at 13,275 on a daily chart closing basis, however, this week’s and the early May high at 14,282 to 14,315 may still be revisited. If bettered, the late April peak at 14,599 would be next in line. For a longer-term bullish picture to emerge, a rise and daily chart close above the late April high at 14,599 needs to take place, though. Source: ProRealTime Worst fall in the Dow for two years has the 31,227 current May low in its sights The rout in the Dow Jones Industrial Average is ongoing with it posting its biggest decline since June 2020 - over 3.5% - as disappointing quarterly earnings from major retailers weighed on the index. The sharp sell-off came as major US retailers’ earnings indicated that inflation squeezed corporate profits. Target shares tumbled 25% in their worst drop since 1987 after the company missed analyst expectations amid higher prices and supply bottlenecks while cutting its profit forecast due to a surge in costs. Walmart stocks fell by 6.8% due to similar issues. A slip through the current May low at 31,227 would engage the March 2021 low at 30,545 and possibly the major 29,871 to 29,194 support area which consists of the February 2020 pre-pandemic and August 2020 highs, December 2020 and January 2021 lows, 38.2% Fibonacci retracement of the 2020-to-2022 advance and 200-week SMA. Were the Dow to stabilise around its 31,227 recent May low, the February low at 32,234 may be retested. Source: ProRealTime
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