New month? No problem, keep calm and carry on buying! With November’s US equity monthly returns the best ever, the last month of a monumental year has kicked off strongly with the bulls firmly in control again. After robust China data boosted expectations of a strong recovery, investors are focusing on the fast approval and rollout of virus vaccines, while there are hopes that Congress can put together a workable stimulus package.
In this risk-on environment, the Dollar has slipped after its brief short squeeze on month-end demand yesterday and is currently trading modestly softer after closing out its worst month since July. The Fed’s Chair Powell is speaking today and he has continued to highlight caution in his advanced text noting ‘significant challenges and uncertainties’ with vaccines. But haven currencies are underperforming as the bullish mood carries on across markets.
Oil prices have steadied after leading producers delayed talks on 2021 output policy at the OPEC+ meeting until Thursday, as key players still disagreed on how much oil they should pump amid current weak demand. Many members want to focus on a brighter tomorrow and are irritated at the output restrictions presently in place.
Recent price action looks to be forming a ‘flag’ which would represent a bullish continuation pattern if it plays out. Buyers bounced back sharply yesterday after prices fell close to the August highs around $46.50 in Brent. With the 27% gain in November, a pause in prices is healthy when we consider how far and fast they have moved.
Gold recovering off recent lows
Gold has advanced back above $1800 as traders take advantage of the recent selloff to bolster their positions. After the weak longs were forced out after the break of the Summer range, shrinking open interest and volumes could mean the chances of a deeper pullback are now diminished. Gold bugs certainly hope so with further Dollar weakness and central bank bond buying taps still fully open for the foreseeable future.
Prices are now sat just above a confluence of support levels around $1800, including the 200-day Moving Average and the lower Keltner band. Next resistance lies at the bottom end of the Summer range around $1848.
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