DAX, Gold Forecast: Two trades to watch

DAX falls as oil prices rise and tech concerns weigh

The DAX, together with its European peers, is falling sharply on Thursday, pulling back from a monthly high hit in the previous session.

The German index trades over 1% lower amid broader weakness across Europe, as escalating tensions in the Middle East have lifted oil prices, while mixed earnings from major U.S. tech companies have reignited worries over elevated AI valuations.

Chips and tech stocks are under pressure globally after more U.S. tech earnings failed to sustain the positive mood that SpaceX earnings had brought earlier in the week.

Meta and Tesla recorded mixed results, with Meta climbing pre-market after beating revenue expectations and raising its capital spending plans, while Tesla fell as it cut back on spending. Weaker-than-expected guidance from chip equipment maker Lam Research has also added to the downbeat mood.

Oil prices are also rising following a deadly attack in Saudi Arabia, which has sent Brent crude above $112 a barrel. Rising oil prices add to inflationary concerns and could put further pressure on European equities by increasing costs for businesses and consumers.

However, the ECB is in a challenging position, whereby hiking interest rates too aggressively to control inflation could slow fragile growth in the region. The ECB will announce its rate decision next week and is widely expected to leave rates unchanged, but is expected to hike before the end of the year.

DAX forecast – technical analysis

The DAX found support at the 200 EMA and broke out above the descending channel. However, the breakout ran into resistance around the 25,700 resistance zone and has since eased back, falling once again below the 50 EMA.

Sellers will need to take out the 200 EMA at 24,939.50 to gain traction towards horizontal support at 24,650, the mid-July low. Below here, attention turns back towards 24,000.

However, while the 200 EMA holds, the longer-term outlook remains constructive. Buyers would need to retake the 50 EMA at 25,500 and rise above horizontal resistance at 25,700 to create a higher high and turn attention towards 26,000.

Gold falls as higher oil prices fuel rate concerns

Gold has fallen over 1.2% on Thursday as rising oil prices have fuelled inflation worries, reinforcing expectations that interest rates could remain high for longer.

Oil prices are rising on Thursday after more attacks by the Houthis on Saudi Arabia prompted the U.S. to order some diplomats and family members to leave the kingdom. Meanwhile, transit through the Strait of Hormuz remains limited.

Sticky inflation, owing to higher energy prices, has increased the likelihood that the Federal Reserve will keep interest rates high for longer.

While the market is pricing in just a 15% chance of a rate hike at the October meeting, it sees an 87% probability of an increase in December.

What's notable is that gold is falling despite a weaker U.S. dollar. The dollar has fallen to a three-week low as investors sell the currency amid concerns over the AI trade and the debt-funded buildout of AI infrastructure. Gold is not being bought as the safe-haven asset of choice, suggesting that interest-rate expectations are currently outweighing support from dollar weakness.

The U.S. economic calendar is relatively quiet this week, with jobless claims due today and University of Michigan confidence figures tomorrow.

Next week's FOMC rate decision on Wednesday will be the main focus and a potential catalyst for gold, ahead of personal core PCE data on Thursday, the Fed's preferred gauge for inflation.

Gold forecast – technical analysis

 

After running into resistance at 4,700, gold has trended lower below a falling trend line, breaking below its 50 and 200 EMA. This, combined with the RSI below 50, keeps sellers hopeful of further downside.

Sellers have been testing the 4,100 support level on multiple occasions over the past month, but have so far failed to sustain a break below it. Should the price settle below 4,100, this could open the door to 4,000 and 3,490, the 2026 low.

On the upside, buyers need to rise above the 4,200 level, which has limited gains over the past three weeks. Above here, attention turns to the 50 EMA at 4,240 and the 200 EMA at 4,290. A rise above these levels could turn the outlook more constructive, with attention turning to 4,500 and 4,700.