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Gold stable after $100 rout

XAU/USD (Gold)
Source:  MT4 (November 10, 2020)

Gold prices tumbled on Monday and bounced slightly on Tuesday holding support near the September lows at $1,848. A rally in US Treasury yields and a stronger dollar weighed on prices. Momentum has turned negative as the fast stochastic generated a crossover sell signal in oversold territory. The current reading of the fast stochastic is 39, down from the oversold reading of 90, which reflects accelerating negative momentum.
 

TAKEAWAYS


•    Eli Lilly gets emergency approval for therapeutic 
•    Gold stabilizes after $100 rout
•    Bond yields continue rising
•    Stock investors switch from tech to value
•    Oil inventories show demand should rise
•    DAY AHEAD: US Veterans Day (stocks open, bonds closed)
 

GURU WISDOM


“Be the change you want to see in the world” – Mahatma Gandhi
 

MARKETS


US stocks continued to show a redistribution of capital, as investors moved out of the technology-heavy Nasdaq and into the Dow Industrial and Small-cap Russell 2000. Stocks that benefited from a stay-at-home trade came under pressure. High flyers like Zoom, Amazon, and Facebook all experience selling pressure. Energy and Materials continued to experience upward price pressures, as expectations are that a vaccine and additional therapeutics will provide a move back to normal allowing value stocks to outperform.

Oil prices remained buoyed after rallying 8% on Monday. The strength in crude oil helped lift energy shares. US yields continued to rally with the 10-year Treasury yield climbing another 2-basis points. 
 

Eli Lilly Gets Into the Fray


COVID continues to spread globally and the infection rate in the US have passed 133K per day. Despite the negative news, the potential antidote information has been upbeat. On Monday Pfizer announced the results from its phase-3 trials. On Tuesday, Eli Lilly’s reported that its antibody medication received emergency-use authorization in the US from the FDA. 

There has been a fair amount of success using this therapy. Early data showed it was effective in treating infected patients. There will also be a significant time lag before the vaccine is available. President-elect Biden reminded us that it will be several months before there is a widespread vaccination. Other reports say that there will be enough for seniors and front-line healthcare staff in January. In the US, expectations are that there will be enough for anyone that wants the vaccine by late March/early April.
 

Energy Demand Is Improving


US crude oil inventories decreased by 8.0 million barrels in the week ending October 30. Despite the pandemic, inventories are about 7% above the five year average for this time of year. Total commercial petroleum inventories decreased by 14.7 million barrels last week. This includes gasoline as well as distillates such as diesel fuel and heating oil. Demand is also on the rise, but still down relative to last year. Total demand for oil products averaged 18.9 million barrels a day, according to the Energy Information Administration, down by 10.9% year over year. Most of the decline is in Jet fuel which is down 44.6% year over year but up from the pandemic lows in April. 
 

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