Two trades to watch: FTSE, Gold

FTSE declines, UK economy grew slower than forecast in August. Gold looks to US CPI.

FTSE declines, UK economy grew slower than forecast in August

The FTSE along with European stocks are heading for a broadly softer start on Wednesday, weighed down by inflation concerns and disappointing UK data.

UK GDP MoM in August rose by a less than expected 0.4%. Expectations had been for a 0.6% increase. Industrial production grew at a slower pace of 4.1% in September, down from 6% in August and missing forecasts of 6% as supply chain bottlenecks bite.

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Where next for FTSE?

The FTSE retaking its 50 sma on the daily chart combined with the bullish MACD is keeping the buyers hopeful of further upside. However, the long wicks indicate selling pressure at these levels and the FTSE has once again struggled at the falling trendline resistance dating back to early August.

Any meaningful recovery would need a close above the said trendline in order to target 7150 the October high ahead of 7186 the September high.

On the flipside, a move below the 50 sma at 7098 could open the door to 7053 this week’s low. A move below here could see the sellers gain traction and bring 7000 the key psychological level into play.

FTSE chart

Gold looks to US CPI

Gold is holding steady after gains in the previous session.

An easing of treasury yields, the IMF trimming global growth forecasts and a risk off mood amid the ongoing Evergrande crisis helped lift gold to 1769. However, risk aversion then boosted the US Dollar to yearly highs. Hawkish comments by Fed speakers Clarinda and Bostic dragged on the yellow metal which settled at 1759.

Today the edgy market mood is underpinning the yellow metal. Gold now looks to the release of the US CPI data and the minutes from the FOMC for further clues. CPI is expected to print at 5.3%. Core CPI at 4%.

Where next for Gold?

Gold failed to capitalize on a breakout from the falling wedge and instead has traded relatively range bound so far in October, capped on the upside by 1770 and on the lower side by 1745. The RSI is offering few clues trading lifelessly around 50.

Buyers might look for a move over 1770 in order to attack the 50 sna at 1775 which would then expose the 200 sma at 1796 and the falling trendline resistance at 1800.

On the downside a move below 1745 could open the door to 1720 the September low, before 1679 the August low comes into play.

Gold chart  

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