Disappointing data on economic activity in the US manufacturing sector put serious pressure on major stock indexes and the yield curve of treasury bonds, which is a positive signal for gold. The yellow metal completed yesterday's trading growth of more than 1%.
The ISM index of the manufacturing sector dropped to a minimum since June 2009 and is another alarming signal about the state of the US economy and its dependence on the situation in world trade. The increased risks again force investors to turn their attention to more reliable assets, such as gold, the Japanese yen and others. Against this background, trade negotiations between the United States and China are the most anticipated event in the first half of October.
Data on declining activity in the manufacturing sector increases the risk of declining demand for labor. The US labor market report, which will be published on Friday, may not meet market expectations, which could further weaken the dollar. In this regard, investors will closely monitor the publication of employment statistics from ADP today.
Weak US statistics increase investor expectations for further easing of US monetary policy. According to CME Group, the probability of interest rate reduction in October is about 76%, compared to 58% before the publication of the ISM index.
On the chart, a fairly strong rebound in the price from the level of 1460.00 took place. But, as we see, the bulls did not immediately manage to overcome the resistance at 1485.00, which increases the likelihood of a new bearish wave and retest of the support area near 1460.00 today.
Resistance Levels: 1485.00, 1499.00, 1510.00;
Support Levels: 1474.00, 1460.00, 1450.00.
The main scenario is a breakdown of intraday support at 1474.00 and a moderate decline in the direction of the level of 1460.00.
An alternative scenario is consolidation in the range of 1474.00-1485.00.
A rather positive news background locally prevails on the market, but the situation is very mixed. We recommend that you look at the shorts from the level of 1485.00 today.