Gold’s Momentum Continues

For the second day in a row the Nasdaq 100 was the top performing major US index, closing up 0.94%, with Google (Nasdaq: GOOG) and Tesla (Nasdaq: TSLA) performing well. The Dow Jones and S&P 500 also closed higher despite US personal spending data coming out slightly weaker than expected. Hurricane Harvey is still affecting the Texas coast and much of the US energy complex is still out of action. The government has released half a million barrels of oil from strategic reserves in an attempt to put a lid on surging gasoline prices. Whether this will have the desired effect will remain to be seen as the cause of the gasoline price surge is the reduced refining capacity rather than insufficient crude supply. Although WTI crude prices were up last night, the net effect of Hurricane Harvey has been almost no change in price despite the disruptions to production in the Gulf of Mexico.

After gold’s technical break through $1,300 a few days ago the price remains strong. Yesterday, during the Asian session, the price retested $1,300 before bouncing and climbing back to $1,320. The technical picture for gold looks good at the moment with the price action building momentum having now climbed around US$100 in the last two months. 

The ASX 200 finally had a bounce yesterday as it approached the lower end of its now three-month long trading range. The bottom of the range is found at around 5,650 while the top is around 5,840. The price hasn’t left this range for over three months so yesterday’s bounce from the lower end perhaps isn’t unsurprising. Futures are only up slightly this morning but it’s possible the index will follow the US leads higher today.     

Tonight we get US non-farm payrolls data from the US which is expected to show the unemployment rate steady at 4.3%. Wednesday’s private sector estimate of this data came out much stronger than expected although there are often significant discrepancies between this and the official data so they need to be taken with a grain of salt.

Data Releases:

–   China Manufacturing PMI 11:45am AEST

–   US Non-Farm Payrolls 10:30pm AEST

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This article was written by William O’Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.