Stocks Drop off Ahead of Heavy Data, Gold Falls Hard After New High
US stock indices took a breather from their recent bull run yesterday as investors looked ahead to some major data risk event this week and Gold had a rollercoaster day first hitting new record highs before dropping like a stone. The three major US indices all fell yesterday to end a 4-session winning streak, the Dow lost just 0.11% but the S&P and Nasdaq were hit a bit harder, losing 0.54% and 0.84% respectively. US Treasury yields and the dollar bounced off multi-month lows, the 10-year gained 4 basis points and the 2-year added 7 basis points, whilst the dollar index gained 0.5% by the end of the day. Gold had an unprecedented day, first surging higher to fresh highs around $2,135 before sharply reversing the move to close the day down near the $2,020 level.
Gold Dives After Hitting Record High
Gold traders were left a bit shell-shocked by the end of yesterdays trading day as the shiny metal first soared to new heights – as more dovish comments from Fed Chair Jerome Powell continued to weight on the dollar – before dropping hard over the rest of the day to finish over $100 off the record levels. The initial move up through previous all-time highs had all the classic signs of a traditional stop-loss run, the market was sitting on those highs into the weekend and thin liquidity in the first trading session of the week saw the move exacerbated higher than it probably should have. The initial move sharply corrected itself to come back to trade just above the $2,085 level relatively quickly but then a general appreciation of the dollar across the board led to more salt being put into the wounds of the stopped-out positions as it dropped another $65 to close the day just above $2,025 and ounce. Traders are bracing themselves for more volatility in a heavy data week ahead, with yesterdays highs, already looking a long way off.
Traders Preparing for A Busy Day Ahead
The event calendar indicated that yesterday should have been the quiet trading day of the week before things started to heat up today but that was clearly not the case, especially if you were in a Gold trading position. But we do have the start of a busy calendar week kicking off today and we hit the ground running in the Asian session, first with the latest release of the Chinese Caixin Services PMI number and then with the latest rate decision from the Reserve Bank of Australia. There is a raft of Final Services PMI data due out in the European session but the real market movers are set to come in the New York session with the first of four jobs related data releases in the US this week, the JOLTS Job Openings numbers, coming out alongside the ISM Services PMI data.
