Gold, ASX 200 Analysis: Asian Open - 20th June 2023

Market summary

• Hopes of a Xi-Biden summit are rising after two days of meetings between US and China in Beijing
• The PBOC are expected to provide further stimulus for cut their loan prime rates today to provide further stimulus
• Whilst An ECB hike in July is expected, officials seem divided over the September meeting with Kane and Slovak saying there’s no urgency to hike, whilst Schnabel sees no time for complacency
• Volatility was predictably low across most markets due to the 3-day weekend in the US
• However, European stocks pulled back from cycle highs due to concerns over the global economy and hawkishness of central banks
• The DAX fell to a 3-day low after printing a record high with a bearish hammer on Friday
• USD/JPY formed a small Doji just beneath the November 21^st high (142.25)
• WTI failed to hold above $72 during light trade / low volumes, although support was found ~$71 and closed the day with a doji candle
• AUD/USD was quick to close the weekend gap, then fell to the second support zone in yesterday’s report before forming the daily low and bouncing higher
• Today’s RBA minutes could reveal how ‘finely balanced’ their latest hike was, although the wording of the statement suggests it was an easier decision to hike. But given the Fed’s threat of another 50bp worth of hikes and the strong AU employment report, hawkish comments in the minutes may carry more weight and increase the odds of a July hike – which could be all but a given if the next inflation report comes in hot

Events in focus (AEDT):

• 11:15 – China LPR (loan prime rate)
• 11:30 – RBA minutes
• 11:35 – RBA assistant governor Kent speech
• 13:40 - RBA assistant governor Bullock speech

ASX 200 at a glance:

• The ASX 200 rallied for a sixth day following a positive lead from Wall Street
• The rally stalled at the upper Bollinger Band, just below the 3700 handle
• Daily volume was also below average to show hesitancy around the highs
• US markets were closed, but we have a weak lead from Europe to gains may be capped / the potential for a pullback is on the cards

Gold 1-hour chart:

Last week’s failed attempt to break beneath 1932 saw high levels of volume around the lows, which triggered a strong rally towards the 1970 highs. Prices have since pulled back on declining volume, which could be part of a falling wedge (bullish reversal pattern). We’re now looking for a move higher to at least test the 1958/60 resistance zone, a break above which brings the highs around 1965 into focus.

The potential pattern is not the ball-all, end all. Because if prices continue to drift lower, we’d reconsider bullish setups around 1947/50 or the 1940/41.44 zone where strong bullish volume formed in the elongated bullish candle.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge