NASDAQ and Gold Struggle Despite Weaker Dollar and Lower Yields
The NASDAQ and global stocks found it difficult to maintain bullish momentum triggering a rebound on Monday. Most indices are in the red on Tuesday, with only defensive stocks witnessing an increase.
The stock market is under pressure from higher interest rates, bond yields, inflation, and a possible economic slowdown. However, today’s bearish volatility is mainly due to a sell-off in shares of a new tech company called Elice.
Furthermore, Gold is also trading lower on Tuesday, continuing the decline from Monday. However, all other metals are increasing in value, and the US Dollar Index is not witnessing any gains. For this reason, investors are contemplating whether Gold is about to rebound. A potential ‘rebound’ could also be dependent on stock market performance.
NASDAQ Struggles After Elice IPO Sell-Off
A Korean data centre company called Elice is in the spotlight during this morning’s Asian session. Elice has recently completed its IPO process and fell more than 30% on its first day of trading.
The sell-off has revived concerns affecting AI companies following recent global setbacks. This is threatening Monday’s attempt to rebound ahead of key earnings data. Elice’s debut comes as sentiment towards AI infrastructure weakens, particularly in the US. This is due to concerns over borrowing costs, intense competition, and long-term returns on massive AI investments.
For this reason, technical analysis on most medium-term timeframes are indicating bearish sentiment. The increase on Monday lost momentum in the second half of the US session, and that continues this morning. As a result, the price forms lower lows and lower highs, and the price this morning remains below the VWAP. For this reason, most indicators point to a bearish bias.
However, technical analysts are aware that the price movement over the next 24 hours, particularly during the next Asian session, will depend on Netflix and Intuitive. Netflix and Intuitive will announce their earnings report today after market close. Netflix stock fell 1.00% on Monday and a further 0.23% indicating shareholders are expecting a weak report. Intuitive, on the other hand, is experiencing a rise.
If the two earnings reports beat expectations, confidence and sentiment towards the NASDAQ could improve, despite more earnings due in the upcoming days. For any upward price movement, the key resistance level can be seen at $30,045. If earnings are weak and trigger a sell-off, the key support level can be seen at $29,077.
Gold (XAU/USD) - Traders Contemplating the Next Price Swing
Gold is trading slightly lower on Tuesday, but is witnessing price swings in both directions. However, pressuring factors are weakening, meaning traders are evaluating whether a buy signal will emerge.
Currently, the US Dollar Index is trading 0.24% lower, and the US 10-year Treasury yield 18 basis points lower. In addition, most metals are trading higher, with Aluminum trading 1.14% higher and Silver up 0.70%. For this reason, market conditions are favouring a short-term rebound after yesterday’s decline.
However, for Gold to indeed rebound, traders will be looking for a final indication from Oil prices. Currently, oil is trading 0.80% higher this morning. If oil prices lose momentum and retrace, Gold will find additional support. For a longer-term rebound, position traders will be looking for weak earnings data and for the stock market downturn to continue.
If the price of Gold falls below $4,124.92, sell signals will strengthen as the price trades below the VWAP and below the 200-bar simple moving average. This decline will also take the price below the 45.00 mark on the RSI. For downward price movement, technical analysts will be monitoring the $4,072 support level and $4,000.
If Gold rises above $4,138.00, while the US Dollar Index continues to decline and oil prices pull back, a potential trend reversal could become more plausible. The key resistance level for any upward price movement can be seen at $4,190.30.
Key Takeaway:
- Global equities struggle to maintain bullish momentum as concerns over inflation, elevated interest rates, and economic growth weigh on market sentiment.
- Elice’s decline of over 30% following its IPO has renewed concerns over AI infrastructure investments and the technology sector.
- Upcoming earnings from Netflix and Intuitive could influence NASDAQ sentiment, with key resistance at $30,045 and support at $29,077.
- A weaker US Dollar and declining Treasury yields could support a Gold rebound, with traders monitoring $4,138 for a potential bullish reversal.
Terms and Conditions apply
Click here to access our Economic Calendar.
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
Michalis Efthymiou
Michalis Efthymiou has extensive experience within the financial sector throughout the UK and Europe. After spending 5 years in London where Michalis operated as a financial advisor and an underwriter, he then entered the market analysis sector.
Additionally, he held training sessions and seminars in over seven countries across the globe and is now focused on providing investors with the required guidance to operate within the market with full confidence.
His teaching methods are based on technical analysis, fundamental analysis and order flow analysis, as well as how to view the market from an institutional angle.
