The S&P 500 experienced ups and downs due to expectations of weak job growth and rising unemployment. After a brief drop, it bounced back thanks to strong performance from the tech sector and some late-day buying.
The U.S. Dollar continued to fall, helping the EUR/USD rise to about 1.1750 ahead of key decisions from the European Central Bank (ECB) and the U.S. Consumer Price Index. The GBP/USD rebounded to near 1.3400 following UK inflation data, with many anticipating a rate cut from the Bank of England.
Gold Trends Upward
Gold is on the rise, trading close to $4,340 amidst market uncertainty and major events in Europe and the U.S. Bitcoin is facing pressure, trading below $87,000, as there are worries about a deeper decline if it breaks key support levels.
Central banks like the Federal Reserve have been easing policies in consecutive meetings, while the Bank of England, ECB, and Bank of Japan are still discussing their next moves. Cryptocurrencies, like Bitcoin, Ethereum, and XRP, continue to drop as institutional investors show less appetite for risk and face additional market pressures.
We’re noticing that sellers in the S&P 500 are losing energy, especially with the recent buying before the market closed. The drop in the CBOE Volatility Index (VIX), from a weekly high of 22 to 19.5, supports the idea of a short-term relief rally. Consider buying near-term call options on the SPX as we approach the end of the year for a potential bounce.
The U.S. Dollar Index (DXY) has dipped below its 50-day moving average of 101.50, indicating further weakness that could help boost equities. With UK inflation data for November showing a low rate of 1.9%, the Bank of England is almost certain to lower rates this week. This makes buying put options on GBP/USD futures a smart move, as it may drop toward the 1.3300 level.
Gold as a Safe Haven
Gold is clearly in the lead, surpassing $4,330 as the go-to safe haven amid global tensions and weak economic data. The Federal Reserve’s third straight rate cut on December 10th pushed real yields further into negative territory, which typically benefits non-yielding assets. Consider buying call options on GC futures or using bull call spreads to take advantage of this strong upward trend.
We’re avoiding cryptocurrency for now, as funds are clearly pulling out. Recent data shows a net outflow of over $750 million from Bitcoin spot ETFs just last week, and the price is struggling to maintain the $87,000 mark. A drop below this support level could result in a significant decline, making protective puts a wise choice for those still holding long positions.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
