Week 9 2024 - Review
Sticky Inflation, poor PMI figures and "weird" Gold movement
Week 9 closed and a new month to finish the quarter already started. We had a week with PCE figures and PMI in focus and in summary, we had sticky inflation with PCE within forecast, reduced consumer data, still good expectations over GDP and surprisingly poor PMI results. To close of the week Gold had a surprisingly upside move closing at 2082s.
We started the week with poor housing data and then on Tuesday Durable goods came bellow the expectations of -4.5% to -6.1%. Beside such result, when checking Durable Goods historical data the result is still within the normal fluctuations hence didn’t brought much into the markets.
GDP on Wednesday came with good results estimations for the last quarter of 2023 and then on Thursday, the most expected day of the week, we had PCE inflation data that came exactly on the expectations which led to markets reacting on rate cuts bets. Adding on at the same time we had an increase on Personal Income but a decrease on Spending and also on Chicago PMI. Well this last one was personally also a surprise. It is true that Chicago PMI as been decreasing for since Nov. 2023 but we have been receiving positive PMI data across the board, so was that a sign for what was to come on the day after? Probably, because of Friday we had very poor ISM PMI at 47.8 against my personal expectations and also against a very optimistic S&P PMI at 52. Adding on the such poor result, Michigan Consumer spending final result was also reduced, which led for Gold to start its push to the upside.
Looking at the charts, we can see Gold for the last sessions and we still preserve the potential sell areas from the week preview.
As we can see, since the start of the new week (vertical line) Gold retested the area of 2038s/2040s (red box) roughly two times before PCE data and on Friday retested another liquidity zone of 2055s before ISM PMI data. That would have been a great sell opportunity if optimistic data was released, nevertheless, porr data came and made gold bullish, but we don’t see that such report is the reason for such upside move to 2080s… but we will go for it later, but in summary gold ranged within roughly 140 pips until Thursday being PCE the catalyst for the upside move and continuations on Friday against our expectations.
ON DXY we also had reactions to the areas we were looking for, although when it came to the 104.2s for potential breaks and retest it turns out to form a resistance area rejecting it and keeping within the range of 103.7s to 104.2, for the entire week.
Looking at both we can see now the strong upside move on Gold to close of the week that went from 2046s to 2087s, more than 400pip move, and during that time and even on writing such post we are not able to justify the move with any fundamental reason, of course we could theorize and give innumerous opinions to justify it, but in the end of the day market makers do whatever they wish and according to their own will and we as retail traders just need to adapt to market conditions. Let’s see if in the coming days we might understand it or not and Gold just closed at 2082 and that’s it.
Not much to add on to Gold and DXY but just a quick reference for Japan and Yen pairs. This week with had some hawkish remarks from BoJ in terms of the shifting the monetary policy but was just remarks and nothing in specific. Although, has markets move ahead we saw some upside move on Yen creating pullbacks on Yen pairs as Yen is hovering all time lows. This is just interesting to watch because since mid Feb that USDJPY is trying to break the 151s heading to 152s where we saw strong reactions previously and since we are still bullish on USD due to still good US economic data we can see potential for upside on UJ.
Hope you are having a great weekend, so reset and refresh and prepare for the coming week which will be interesting in terms of data, labor and Jerome Powell testimony in focus.
Great review!
Have a look at 10yr bond futures (ZN) and silver (xagusd) as well. Correlated well with the inflow into gold. Looks like there was a bid into metals primarily gold.