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Spot gold hit a low of $1308 overnight

Four key markets in focus today.

Spot gold

It was clearly the big mover overnight, hitting a low of $1308. I have highlighted gold recently, but price action is looking much more bearish of late and has now not only broken the year’s uptrend, but the 38.2% retracement of the $1182 to $1392 rally at $1312. The MACD on the daily chart is highlighting that the momentum is negative and selling rallies is my preferred strategy here. A break of $1300 would see gold target $1260.

AUD/USD

Looking at the daily chart, momentum and trend indicators suggest long positions are favoured. Traders are keen to watch for a daily close above the 200-day moving average at 0.9139, a level the pair has been above since April 2013. Also, a break above the neckline of the inverse head and shoulders pattern at 0.9146 would be even more bullish and suggest a much more projected rally could be on the cards. The pair is at a clear inflection point and technically there are signs it wants to go much higher over the medium term. RBA member Phillip Lowe speaks today at 15:45 AEDT and could move the AUD in afternoon trade if he talks more positively about the Australian economy, although there are naturally risks he talks down the AUD.

Brent Crude

Selling rallies is preferred, given the series of lower highs since last August. What is clear though is the market seems very happy to buy on falls to the $106 level. A break here in the short term would be bearish, but it seems this is the ‘buy’ zone with which the market is working.

GBP/USD

I am staying with my long EUR/GBP, however GBP/USD and GBP/AUD look weak as well. In European trade today the market will be keen to watch out for UK (February) CPI, which is expected to slow to 1.7% from 1.9%. The market still feels that the BoE will raise interest rates in Q1, but there are signs that sterling is looking fairly vulnerable right now. We also get the German IFO survey, which could influence the EUR as well.

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