Potential corrective moves in Gold and Stocks: A Brief overview about commodities.


The last week was pretty important since the investors were overly cautious about the FOMC meeting minute about the interest rate hike decision. Though it was very clear that the FED will come up with the neutral statement in the last FOMC meeting minute however investors were very much keen to extract the slightest hint to predict the market next move in the last FOMC meeting minute. Followed by the last FOMC meeting minute, there has been a clear indication that the gold price has initiated its corrective move in the last week. There has been a correction of 30% in the large caps (HUI,GDX).Keeping pace with the large caps the juniors (GDXJ) has also corrected to the same  amount in the last week. Considering the number of parameters and rising yields we might see a decent correction in this upcoming week before it finally consolidates. Along with the corrective move, a number of other technical parameters also suggest a downward move of the GDC to $22 and GDXJ to $34-35 in the upcoming week. The bearish move also goes in favor of the long-term technical analysis of the financial instrument. To be precise we might see a short-term low in this sector, however, the overall bias remains in favor of the current move for the next few weeks.

After the recent speech of the Federal Reserve Chief Janet Yellen, sling data, and the slew bank earnings caused the Wall Street to trade higher. At 11:21 AM ET, there has been a sharp gain of 101 points or 0.57% and the S&P 500 increased 8% or 0.36%.Along with this there has also an increase in the Tech-heavy Nasdaq Composite for about 0.63% or 30 points. Though the rise was very decent but there remains the question about price stability since FED didn’t clear the investors about their interest rate hike decision in the month of December. Though the FOMC meeting minute was very plain but forex online traders are expecting a rise in the U.S interest rate in the month of December. Recently scheduled speech by Yellen on Macroeconomics research after the massive crisis in U.S economy eased the U.S investors to a certain extent since the meeting was completed with hawkish tone by the FED member. The meeting gave some smoky indication of the interest rate hike possibility by the fed since several voting members of the FED are already in favor of the rate hike decision in the month of December. This is a very strong indication for a rate hike by the FED in the month of December since there is only two meeting left by the FED in this year to argue against the rate hike matter. On the contrary, the upcoming presidential election on 8th November is also going to create strong volatility in the Stock market which is also very close to the November FOMC scheduled meeting.

Though it’s pretty much clear that the FED is not ready to hike their interest rate in the month of November FOMC meeting minute however there remains a small possibility of a rate hike for about 7.2% in the month of November according to the Fed Rate Monitor Tool whereas the month of December has 64.8% chance. Despite the massive confusion, the U.S retail sales increased 0.6 % in the month of September, bouncing back from the sharp decline of 0.2%.Though the overall bias remains negative but researchers are expecting strong positive sentiment in the U.S consumers from the very starting of the month of December. The core sales which are very much closely related to the GDP also recovered its initial losses after the last month decline. The data came as green (0.5%) which beat the analyst expected increase of 0.4%.The value of the PPI or Producer Price Index also increased in the month of September causing a rise in the price pressure at the factory gate. The data is very closely related to the interest rate hike decision of the FED as inflation and speculation is most likely to force the FED to tighten their monetary policy. But the expectation of the investors is greatly affected by the consumer sentiment sharply dropped in the last week to its lowest since 2015.

Keeping all the fundamental factors in mind the JPMorgan (NYSE) kicked off the third-quarter reporting seasons for the banks. All the gains were pretty much limited since the major prevailing in the current U.S economy. To be precise the value of the shares only advanced for 0.2%.Keeping the earning topped census, the Citigroup(NYSE:C) shares gained only 0.6%.On the contrary, the Well Fargo shares went down for about 0.8% followed by the loss of the revenue as expected. On the other hand, the overall trading session was lower on Friday as the investors continued to weigh this Weeks’s surprise build in U.S crude inventories against a major decline in the gasoline and stocks. The Baker Hughes data also created a sharp sensation into the mind of investors since the number oil drilling rigs rose by 3 to 428 making the 14th increase in 15 weeks. Massive fear is prevailing in the market and investors are overly cautious about the current U.S production since it might create a downward pressure on the global supply. This has been furthermore intensified by the fall of U.S crude futures from 0.50% to $50.19 by 11:23 AM ET whereas Brent oil suffered a loss of 0.56% to $ 51.74.