The demand for safe haven assets have seen markets such as treasuries, yen and gold rise. Speculation that the Fed may drag its heels with lifting rates have also pushed the gold price to its highest since October.
Where Are The Sellers?
Some commentators still expect gold to fall this year however. Barclay’s expects gold to fall to $1,130 this year.
Where could the bears consider positioning themselves for selling this instrument?
The current price looks interesting given the recent demand at this level. The next level there may be some short interest at is around 1275 – the previously well defended lows between April and May of last year and the hook price where demand flipped to supply at the start of September may might get a bit of attention if price makes it up this far.
Where Might The Shorts Get Involved?
Traders will be watching the US Dollar this week after the news released on Friday around jobs data. Total non farm employment rose 252K and the unemployment rate dropped to 5.6% – both of these beating market expectations. These positive numbers were slightly offset by disappointing hourly wage numbers which demonstrate low wage growth.
So, it was a mixed bag for the dollar at the end of last week and there are a number of risk events for the Greenback which are worth being aware of going into the week:
And finally, its worth taking a quick look at the US Dollar index futures chart, we are at an interesting historic level in terms of previous supply on the dollar.
USD Index at an interesting historic level
As January Goes, So Goes The Year
Brent futures and WTI are trading at five and a half year lows. January has started weak – the year opened with Brent at about $58 and is now testing the $50 mark which is a significant market level.
Markets Can Remain Irrational Longer Than You Can Remain Solvent
We are at technical support levels but that is no reason to be a buyer just yet. If the current sell off were to match the 2008 bear market, $16 for Brent could be seen.
Buyers have previously bought Brent at $47; if this level breaks, the next significant demand zone is around $35 – $36.
The Race To The Bottom With Oil
Why Is The Price Of Oil Dropping?
According to the Economist, there are four things affecting Oil:
- Demand is low due to weak economic activity.
- Problems in Iraq and Iran have not impacted their output.
- America is now the worlds largest oil producer.
- Production has not been cut by the Gulf producers.
SparkProfit’s Sentiment Indicator Remains Strongly Bearish
The sentiment indicator generated by the thousands of players around the world playing SparkProfit is at bearish extremes and has mostly been negative about Oil since September.