The Fed shifts narrative to dovish: Gold and Nasdaq in focus

This week, the financial markets have been preoccupied with the changing narrative from the Federal Reserve, trying to figure out whether it will raise interest rates any further. Fed chair Jerome Powell’s recent press conference sounded dovish to the market, as 30-year treasury bonds yields slid from their peak to below 5%. 

The probability of interest rate hikes in 2024 has also diminished: according to the Fed’s watch tool, most traders look forward to a modest rate decline in September next year.

Further hawkish comments from Powell interrupted rallies in the Nasdaq and S&P500, making them correct during Thursday’s session. The positive reaction of stock indices to the changing narrative looks excessive, so it might be problematic for stocks to continue growing in the short term. 

Gold, on the other hand, looks oversold, considering the previous strong trend. It has landed in the technical support area around 1940-1950, and may rebound higher.

Markets are looking forward to the CPI publication on Tuesday, 14 November, along with the core inflation rate. The latter is expected to stay at 4.1%, but could dip slightly, considering the weaker non-farm payroll (NFP) number earlier this month.

Gold

Gold’s price landed in the dynamic support area and retested the previous low from 24 October. That might push it higher, back into the bullish trend which is still active. The precious metal is getting support from weakening yields of US bonds, and an overall softening narrative.

Nasdaq 

As the stock market concludes earnings season, growth potential may be over for now. Nasdaq had reached an important resistance level of 15200 and now displays technical weakness above this level, supported by fresh hawkish statements from the Fed. So, a pullback by Nasdaq to the area below 15000 is entirely possible.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.

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Author:

Stanislav Bernukhov

Stanislav Bernukhov is a professional and trained trading trainer with 15 years of experience in this field. He specializes in multiple trading methods, including price action, Market auction theory, and unconventional graphical analysis.