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Gold jumps before final day of Q3

Bitcoin – Weekly Candlesticks
Source: GKFX / MT4 (September 29, 2020)

Bitcoin broke above its descending trendline but has since pulled back and is re-testing previous resistance as support around the 10,000 level. 
 

TAKEAWAYS


•    Gold jumps, stocks snap 3-day winning streak
•    Oil price slides after New York positivity rate hits 3%
•    End of the third quarter repositioning 
•    EUR/USD rallies while deflation in Germany reaches 5-year high
•    DAY AHEAD: China manufacturing PMIs, US ADP employment
 

GURU WISDOM


“Life is what happens when you’re busy making other plans.” – John Lennon
 

MARKETS


Gold was a standout gainer on Tuesday (reaching yesterday’s double bottom target of $1900 in the space of 24 hours). Gold rallied 1%, while silver slumped 3% thanks to a slide in the US dollar and a meeting between US Treasury Secretary Mnuchin and House Speaker Nancy Pelosi buoying hopes for a new stimulus bill. 

Oil prices on the other hand took a hammering after the New York major said the city’s COVID-19 positivity rate reached over 3% for the first time in months and virus cases continued to rise in Europe, threatening the demand outlook. 

Wall Street snapped a 3-day winning streak as global markets edged lower in nervous trade in the lead up to the Presidential debate. European markets dropped amid a fall-back in bank stocks as JP Morgan agreed to pay $1 billion fine for ‘spoofing’ metals markets. The Hong-Kong debut of ZTO Express rose an impressive 9% in a mostly positive day across Asian markets. 
 

Q3 Ends


Wednesday marks the end of the third quarter- and the beginning of a potentially more turbulent fourth quarter. Some of the biggest stock market crashes in history have happened in October. This time around, nerves could be especially high heading into the winter months for fear of a second wave of the coronavirus.

September, the last month of the quarter has seen the S&P 500 give back some of the big gains made in July and August. This is a repeat of the pattern from Q2, whereby June corrected gains made in April and May. If the pattern were to continue, it would imply gains through the US election in November with a December sell-off.
 

German inflation


The euro making a sizeable upside move (EUR/USD +60 pips) on news that German deflation hit -0.4% in September, its worst in 5 years, is a potentially a telling signal. When markets rise on bad news it shows strength. COT positioning data this week showed investors are still strongly bullish the euro (bearish the dollar) despite the big pullback last week.