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Daily Analysis: Gold Nears $1300 as Stocks Tumble on War Fears

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Daily Analysis: Gold Nears $1300 as Stocks Tumble on War Fears

Introduction

This article was posted on Thursday, 17:33, UTC.

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2446 -1.07%
DAX 12014 -1.15%
WTI Crude Oil 49.22 -0.62%
GOLD 1290.00 0.85%
Bitcoin 2434 4.23%
EUR/USD 1.1761 0.04%

The North Korean escalation has turned this vacation week into a rollercoaster ride for investors, as markets are trying to judge the real probabilities of a, possibly nuclear, conflict. While fierce statements have been thrown around by both sides, the chances of an actual US intervention still seems slim, despite the recent risk-off turn in financial markets. Equities are in a broad decline globally, while currencies and commodities turned very choppy amid the escalation, with the worse than expected US PPI data adding insult to injury.

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Dollar Index, 4-Hour Chart Analysis

Gold is the clear winner of the day so far, as the precious metal was boosted by safe haven buying and the weak US release as well. Gold is now just shy of the long-term resistance at $1300, and we still expect the level to fall, with the long-term fundamentals being very bullish for the metal.  The rise in the VIX (a three month high) is also reflecting the negative sentiment, and that helped the Yen in hitting yet another high against the Dollar, although the Greenback is holding on to its gains compared to the risk-on currencies. The USD sold-0ff following the bearish PPI report, but safe haven buying helped to limit its losses in the choppy environment.

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Gold, 4-Hour Chart Analysis

Cryptocurrencies

The sector is still clearly in an uptrend following the long-lasting correction in July and the uncertainty surrounding the Bitcoin fork. The most valuable currency is only slightly off its recent all-time highs, while the rest of the market is also edging higher, despite the current short-term consolidation, and Litecoin, Dash, and Monero are all within striking distance of their respective highs. While Ripple, and ETC are still weak, and NEM is well off its all-time highs, the strength is small cap coins should be an encouraging sign for investors, and odds favor bullish moves even in the current laggards of the segment.

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ETH/USD, 4-Hour Chart Analysis

Technical Picture

The S&P 500 turned lower off its all-time highs after a period of very low volatility, as the North Korean situation triggered a sell-off, with the weak market internals adding to the decline as well. The benchmark is still in a long-term uptrend, but odds now favor a decline to 2415, with trendline support currently found slightly below that level. In the case of a trend-break, the next major target zone for the correction is near 2350.

S&P 500, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
1:50 JAPAN PPI Index 4.2% 2.3% 2.1%
10:30 UK Manufacturing Production 0.0% 0.0% -0.2%
10:30 UK Goods Trade Balance -12.7 bill -11 bill -11.9 bill
14:30 CANADA NHPI 0.2% 0.5% 0.7%
14:30 US PPI Index -0.1% 0.1% 0.1%
14:30 US Initial Jobles Claims 244,000 244,000 240,000

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
8:00 GERMANY Final CPI 0.4% 0.4%
14:30 US CPI Index 0.2% 0.0%
14:30 US Core CPI Index 0.2% 0.1%

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Mate Cser

Mate Cser

Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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