Two trades to watch: FTSE Gold

FTSE rises after GDP is revised higher. Gold rises ahead of core PCE.

Gold 2

FTSE rises after GDP is revised higher 

The FTSE is pushing higher after suffering heavy falls of 1.7% in the previous session after the relief rally from the BoE’s intervention in the gilt market was short-lived, as Liz Truss stand’s by the Chancellor’s budget ruling out a. 

The UK index is rising in early trade after UK GDP unexpectedly grew in the second quarter. GDP was upwardly revised to 0.2% QoQ, up from -0.1% previously estimated. 

This means the UK economy has avoided a recession across the summer months despite the cost of living crisis. However, the slump will likely be in the year's third and fourth quarters. 

Housebuilders are leading the index higher; after a roller coaster ride of a week, the mood appears to be stabilizing. 

Where next for the FTSE? 

The FTSE found support yesterday at 6838, the March 8 low, and has rebounded. The long lower wicks on the candles suggest that there was little appetite at the lower levels. The RSI is still in oversold territory. 

Buyers will be looking for a move over 6900 round number to resistance at 7000 psychological level. It would take a move over 7125/50 resistance zone to negate the near-term downtrend. 

Sellers need to break below 6840 to extend the selloff towards 6760, the March 2020 low. 



Gold rises ahead of core PCE 

Gold is rising, extending gains from the previous session. The precious metal has benefited from the weaker USD, which has lost 1.2% across the week.  

Today Gold is heading higher as the USD once again fall lower, although the precious metal lacks conviction after more hawkish Fed comments., as officials reiterate their commitment to hiking rates. 

Attention now turns to the core PCE, the Fed’s preferred gauge of inflation. Core PCE is expected to rise to 4.7% YoY, up from 4.6%. Meanwhile, PCE is expected to rise to 6.7% up from 6.3%. Hotter than expected inflation could lift hawkish Federal Reserve bets. Currently, the market is pricing in a 56% probability of a 75 basis point hike in November. 

Where next for Gold prices? 

Gold has rebounded off the 1615 2.5 year low and is rebounding higher. The bullish crossover on the MACD plus the rise over support at 1660 keeps buyers hopeful of further upside. 

Buyers will look for a move over 1679 the 20 sma and 1688 last week’s high. Above here 1700 comes into focus and 1730 the 50 sma and falling trendline resistance. 

Failure to break above 1679 could see sellers head lower towards support at 1660, with a move below here opening the door to 1614. 



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