Asian stocks rebounded after suffering their biggest one-day drop since April, following sharp swings in gold and silver prices that rattled other asset prices. The market then stabilized. Precious metal prices rose in early trading.
The MSCI Asia Pacific Index rose more than 1.5%, with technology stocks leading the gains. South Korea’s stock market, a benchmark in the artificial intelligence field and one of the best-performing markets globally this year, rebounded after plunging 5.3% on Monday. Nasdaq 100 futures rose 0.7% after Palantir Technologies Inc. issued stronger-than-expected sales forecasts.
Gold and silver prices rose, recouping some of the ground lost after a record-breaking rally came to an abrupt halt. The prices of the two metals had slumped sharply in the previous two days. As market sentiment improved, the price of Bitcoin rose to near $79,000. The Bloomberg Dollar Spot Index weakened slightly after rising for two consecutive days, following US President Donald Trump’s nomination of Kevin Warsh as the next chair of the Federal Reserve.
Unlike the sharp sell-off in Asian trading on Monday, Wall Street’s stock indexes rose. A surge in demand for US factory activity was the catalyst for the shift in market sentiment, sending an optimistic signal about the economy and corporate earnings. Continued growth will help strengthen confidence that manufacturing is recovering after a three-year slump.
Despite the overall bullish sentiment on Wall Street, indicators measuring the performance of US tech giants were lackluster on Monday. Shares of The Walt Disney Company declined after the company issued a weak earnings outlook. Oracle Corporation is issuing $25 billion in investment-grade bonds to help finance infrastructure needed for its artificial intelligence projects.
But most of the market’s attention was focused on precious metals, which recouped some of their losses after suffering another sharp sell-off in Asian trading on Monday.
Last month, the prices of precious metals soared to record highs, with the rapid increase even surprising seasoned traders. Investors flocked to the gold and silver markets as concerns over geopolitical turmoil, currency devaluation, and the threat to the independence of the Federal Reserve resurfaced. The buying spree by Chinese speculators further fueled this rally.
On Friday, the situation reversed as the dollar rebounded and precious metal prices fell when Trump said he would nominate Powell as the chair of the Federal Reserve.
The market believes that compared with other candidates, Warsh is more inclined to confront the rising price pressure. This stance may imply that monetary policy will support the US dollar, thereby weakening the so-called “currency devaluation” trade that previously led to the soaring gold price.
Technical analysis:
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Gold: After two days of pullback last Friday and Monday, the price is attempting to stabilize in the 4500-4700 range again. Yesterday, we mentioned that a recovery to 4650-4700 could be a signal to consider going long again, and the price has now reached that level. For today, it is recommended to pay attention to the pullback near 4700 and the signals of liquidity sweeping. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Yesterday, we clearly reminded in the article that a long position signal could be considered only after the price recovers to 25,450/25,400. Currently, the price has reached this level. Today, pay attention to the price pullback near 25,600. After the liquidity hunt, then look for the rebound signal. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, we hoped that the oil price could break through the liquidity in the yellow area, but the price did not completely fall below that area overnight. Currently, the price has formed a consolidation pattern in the 61.80 – 62.60 range. If the price breaks through the pattern upward within the day, it can be considered to chase the high short-term, with the target at around 63.80. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
15:45 French January Consumer Price Index
22:00 US Durable Goods Orders for December (Revised)
23:00 U.S. Job Openings and Labor Turnover Survey (JOLTS) for December (in thousands)
