0407 GOLD going to make a retest of last high

4 Jul 2024

Hello traders,

Please be aware that the U.S. market is closing early today due to the ongoing U.S. holiday.

The market is eagerly anticipating the return of U.S. traders, particularly for the release of the US Non-Farm Payrolls data at 8:30 PM tomorrow.

While the U.S. unemployment rate had previously reached a historic low of 3.4%, indicating a strong economic recovery, the recent upward trend to 4% in May suggests a shift in the economic landscape.

The current situation in the United States reflects a transition to what economists consider ideal equilibrium - full employment. This refers to a state where all individuals willing and able to work can secure employment without cyclical unemployment, ultimately reaching a low and stable unemployment rate. Economists typically consider an unemployment rate of approximately 4% in the U.S. as an indication of full employment, signaling a healthy and balanced labor market.

Of particular interest on Friday will be the duration for which U.S. nonfarm payrolls remain at the 4% level. A prolonged stabilization at this level or a slow rise could be a signal of a potential recession. Markets understand that in the event of a recession, there will be a need to reduce interest rates to stimulate the economy, likely leading to increased demand for commodities, especially gold.

As for gold, the 4-hour market chart shows a breakthrough, suggesting a sideways movement rather than a retracement. Moving forward, holding onto a long position is considered the appropriate trading strategy, provided there are no significant changes in market fundamentals. It emphasizes a non-counter trend trading approach as a sustainable trading method.

GOOD LUCK!
LESS IS MORE!

5 Jul 2024

Catatan

This past week, there was a notable increase in the U.S. guaranteed overnight funding rate, rising to a record high of 5.4%.

The U.S. market is currently experiencing a capital shortage, leading the government to issue Treasury bonds on a regular basis. This includes the recent sales of $76 billion in three-month Treasury bills on July 8, $58 billion in three-year Treasury bonds on July 9, and $39 billion in 10-year Treasuries on July 10.

At the same time, money market assets have reached a record high of $6.15 trillion according to ICI data, as Yellen takes aggressive measures to extract liquidity from the market. The tight liquidity situation in the U.S. has once again captured attention.

Given these developments, the question arises: what impact will this have on gold and crude oil?

Today marks the first trading day following the U.S. holiday and coincides with the release of the non-farm payrolls data.

In a tight liquidity environment, investors typically favor relatively safe haven assets like gold, which in turn could drive its prices higher. However, the increased supply of dollars in the market due to the frequent issuance of Treasury bonds by the U.S. government may also suppress the rise in gold prices. The influence on gold and crude oil will depend on which factor holds more sway given these conflicting effects.

Moreover, a series of data releases in the United States this week has indicated a surge in job vacancies, with the ADP data falling short of expectations, continued jobless claims surging, weak ISM services data, rapid disappearance of orders, and elevated spending prices, all signaling a trend of economic weakness. If the unemployment rate continues to rise based on tonight's data, there are indications that the economy might be on a downward trajectory, potentially leading to an expected future interest rate cut.

This weekly assessment is based on the tone of the Fed officials, not on speculation. The key highlights from this week's Federal Reserve minutes are as follows:
- A general belief among Fed officials in a gradual cooling of economic growth.
- Readiness expressed by some officials to address unforeseen economic weaknesses.

During Powell's address this week, several key points were revealed:
- The Fed does not foresee inflation reaching 2% in the coming year or the following year.
- Emphasis on the significant and unsustainable nature of the budget deficit.
- Noting that while the unemployment rate at 4% is still low, unforeseen weaknesses in the labor market could trigger a response.

The visual analysis of gold (refer to Figure 1) this week has stressed the importance of following the trend on large time charts in trading, maintaining a positive outlook. Gold is currently positioned at 2367 and is expected to exceed this level before the release of the non-farm payrolls data. Breaking through the 2400 mark is anticipated to attract a surge in bullish momentum, propelling gold to new highs.

Turning to crude oil (refer to Figure 2), it is evident that it is emerging from a period of sideways movement and gearing up for a breakthrough. The current bullish trend is evident in the latest price updates, remaining steadfast. The long orders maintained are aligned with the target range of FIBO EXT 1.27-1.618.

For swing traders in the weekly intra-trend, this week's long positions are recommended, particularly with the highly anticipated non-farm payrolls data. Effective risk management is crucial to allow expectations to materialize during this phase.

11 Jul 2024

Catatan

Suddenly, with Powell’s testimony this week, markets are trading in expectations of a “hard landing”?

1. Because “soft landing” has been priced in by the market:

★The stock trades at 21 times expected earnings over the next 12 months and is expected to grow steadily over 30%;
★The Federal Reserve is expected to cut interest rates by 150 basis points by the end of 2025 (6 cuts);
★The term premium of bonds is zero.

And for stocks and bonds to rise further, the result must exceed current pricing expectations.

★Stock growth exceeds 30%;
★The interest rate cut range exceeds 150 points to more than 180 points (8 times of interest rate cuts)
★The term premium of bonds is negative.

12 Jul 2024

Trading ditutup: target tercapai