Gold rose 0.5% and crude oil prices rose to a new multi-month high

29 December 2021, 02:50

Market Focus

The S&P 500 Index fell after hitting an all-time high of 4,807.00 on Tuesday, as investors felt pressured by concerns about the continued surge in global coronavirus cases amid the so-called Santa Claus rally. In recent weeks, as governments around the world adopt restrictive measures to curb coronavirus infections, stocks have been hit by the spread of the Omicron variant. However, some recent studies have shown that this mutation may cause milder symptoms and a lower risk of hospitalization. At closing, the Dow Jones Industrial Average gained 0.26% to 36,398.22 points, the S&P 500 index dropped 0.1% to 4,786.34 and the Nasdaq Composite Index fell by 0.6%.

Defensive sectors such as utilities were among the sectors with the biggest gains on the day, with Valero Energy rising 1.9%. Airline stocks including Southwest Airlines, United Airlines, and Delta Air Lines rebounded from the weakness seen a day ago when there were reports that Covid-related issues, including labour shortages, forced airlines to cancel thousands of flights during the Christmas weekend. Boeing also rose about 1.5% after Indonesia lifted the ban on the 737 MAX. On the other hand, the fall of the market from historical highs coincides with the weak price trend of technology stocks after several consecutive days of rising. Microsoft, Google’s Alphabet and Apple slipped slightly and are in the red, while Meta and Amazon closed slightly higher. In addition, the sector was also dragged down by the decline in chip stocks. Nvidia fell 2.01%, Marvell Technology down 3.11%, and Micron Technology declined 1.58%.

Main Pairs Movement

While markets remained light near the end of the year, they had their ups and downs. After the US market opened, the US dollar received some attention and rose against most major competitors. US stocks opened strongly and hit a record high, but then fell rapidly, and the major stock indexes closed mixed. In the absence of relevant news, investor attention has become increasing speculative about whether the Fed might raise interest rates in March 2022.

US Treasury yields remained low, closing at around 1.484%, while the DXY index closed at 96.15.

EUR/USD is under pressure at 1.1300, while GBP/USD stayed above 1.3400 after hitting a new monthly high of 1. 3461. AUD/USD traded near 0.7220, while USD/CAD was near 1.2816, as commodities fell from new highs. The USD/JPY rate was slightly lower than 115.00, maintaining a bullish stance.

Gold rose 0.5% to $1,818.50 per ounce, and crude oil prices rose to a new multi-month high, with WTI reaching $76.89 per barrel.

Bitcoin fell by about 6.3% on Monday to close at around $47,543.3. Over the past five days, the cryptocurrency has been oscillating around $50,000.

Technical Analysis

AUDUSD (4- Hour Chart)

The Aussie pares its intraday gain throughout the early American session. From a technical standpoint, the outlook of AUDUSD remains bullish, holding steadily above the static resistance at 0.7227. Early today, the upside momentum attempted to climb up, contesting the immediate hurdle at 0.7277, but ended up failing it as the RSI was nearly overbought and it hit the upper bound of Bollinger Band. At the time of writing, the RSI has turned downwards while the MACD has turned negative, suggesting that selling interest has emerged. AUDUSD is expected to head toward 0.7227 and the lower bound of Bollinger Band for an adjustment. The next relevant support is at 0.717, followed by 0.7116.

Resistance: 0.7277

Support: 0.7227, 0.7170, 0.7116

XAUUSD ( 4- Hour Chart)

Gold price climbed up above the 1810 level, surpassing its highest since November despite risk-on markets and holiday trading conditions. From a technical perspective, the outlook of gold becomes bullish in the near- term after it breaks above the critical resistance at 1812, which was the December high. The immediate upside will need to challenge 1826 in order to extend further north. Since gold continued to stay steadily above the 20 SMAs and the RSI reading has not yet reached the overbought territory, the upside momentum is expected to continue. On the flip side, if the selling pressure intensifies, the bears will aim for 1798, followed by the support at 1781.

Resistance: 1826, 1843, 1870

Support: 1812, 1798, 1781

BTCUSD (Daily Chart)

Bitcoin slipped below 50000, trading at 47500 at the time of writing after more and more countries have attempted to put taxes on or ban the usage of crypto. From a technical perspective, the barrier at 51000 has acted as a strong resistance for Bitcoin. Bitcoin has clung on the level for more than 4 days, but it failed to overcome the immediate resistance of 51000. The near-term outlook has turned bearish as intraday trading has brought the price below the 20 SMA. On the downside, if Bitcoin cannot hold above the support level at 46510, then its downside momentum will accelerate towards 39566, implying a bearish trend. As the RSI is currently favouring the sellers, Bitcoin is expected to slide down toward the immediate support level.

Resistance: 46510, 39566, 32621

Support: 51034, 55103, 58000