Two trades to watch: FTSE, Gold

FTSE under pressure despite hiring surges. Gold retakes 200 day moving average after Powell reiterates transitory inflation verse. Jobless claims & Powell in focus today.

Gold 1

FTSE under pressure despite hiring surging

The FTSE along with its European peers, is heading for a mildly softer start as investors digest Chinese data, a surge in UK employment and amid growing covid concerns.  

China’s GDP came in softer than expected at 7.9% in Q2 compared to a year earlier, expectations had been for 8.1% growth. However, retail sales in China and industrial production beat forecasts. 

UK unemployment unexpectedly ticked high to 4.8% in the three months to May, from 4.7% in April. However, 365000 jobs were added in June, a huge surge as the economy reopened. 

The travel sector will be under the spotlight again after the UK updated its travel lists, taking the popular Balearics off the green list and putting on the amber list in a blow to the travel industry. 


Where next for the FTSE? 

The FTSE has been forming a series of lower highs since reaching its post pandemic high of 7220 in mid-June. The price trades below its descending trendline, and has fallen below its 50 & 100 sma on the 4 hour chart. 

The RSI is supportive of further losses whilst it remains out of oversold territory. 

Immediate support can be seen at 7060 the weekly low. A break below here could open the door to 7000 the key psychological level and on towards 6980 the July low. 

Any recovery would need to retake the 50 and 100 sma at 7100 in order to attack the descending trendline at 7150. A move above here could see the buyers gain traction. 

 

Gold retakes 200 dma, Powell in focus

The outlook for gold brightened yesterday after Federal Reserve Chair Jerome Powell reiterated that the spike in inflation was transitory and that the US economic recovery was still a way from where the Fed want’s it to be to start tightening economic policy. 

The fundamental outlook for Gold has which is often referred to as an inflation hedge has improved. Inflation is elevated at 5.4% but the Fed not moving to tighten policy, insisting that inflation is transitory. 

The weaker US Dollar and rising concerns over the rise of delta covid cases are also supportive of the precious metal. 

Attention will now turn to US initial jobless claims and the second testimony this week by Jerome Powell to Congress later today. 

Where next for Gold? 

Gold continues its rebound from the late June 1751 low. Gold has pushed over the 200 day ma improving its outlook, it is also heading for its 50 dma at 1837. The 50 dma crossed above the 200 dma in a bullish signal and the RSI is supportive of further gains whilst it remains out of overbought territory. 

Beyond the 50 sma resistance can be seen at 1855 a swing low from June 4 ahead of 1900 the key psychological level. 

On the flip side, the 100 sma offers support at 1825 a break below here could see the ascending trendline support tested at 1810 and 1800 round number ahead of 1750. 

 

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