 Okay, very good morning to you. It is Wednesday the 12th of August. Hope you're doing well and yeah everyone talking about gold Given the big sell-off that we had yesterday and in fact gold is already down in the futures market at least it Briefly broke through 1900 has been down in excess of $50 again already today's reverse course a little bit Still down about 40 bucks on the sessions So that's going to really dominate a lot of this morning briefing Before I begin though, what I just wanted to say was check out the amplified trading YouTube channel Please do subscribe if you have not already done so hit that Bell icon to be notified of any new videos that we release and on that note immediately After or amid the selling pressure from yesterday I managed to speak to one of the traders and mentors Alex who had a really good take about why gold Specifically was selling off yesterday So if you go on the YouTube channel if you scroll down, we have different categories of content. There's one there about gold What just happened? Yeah, great. We've already already had close to 9,000 views in the last couple of hours So yeah, really great take from him kind of live him watching it day to day and minute by minute And his take on on why it's happening and his forecast for why he actually thinks markets are going to bounce Not specifically today, but over the the coming months still remaining a ball on gold And that pretty much is echoed across Wall Street from much of the research. I've been reading This morning and so again, don't forget to subscribe to the channel to get get hold of those types of videos Moving on though, let's have a look at the actual charts this morning and let's just get stuck straight into gold and Gonna make that chart Bigger here and I'm gonna remove my video camera for a second just so you can get the full chart perspective So yeah, I've just got Looking at gold here over the course of really going back About 20 days or so so we can encapsulate this kind of phenomenal rise that we've had of course with the breach Coming in late July of 2000 which saw I guess this kind of area here Which was the the push above the breakout As we were Typically seeing these types of episodes of where we're in uncharted territories such a big multiple test on a technical level Then we we bust out to the upside And we've continued to claw it out up towards 2100 and then we had a bit of a breakdown Towards the back end of last week Obviously, we've had a couple of decent data points come in from jobless to payrolls And that did bump prices a little lower with some of the technical breaches of some of these these key levels But yeah, yesterday it really all started to come together and we saw a complete breakdown of Prices where we started the day really in the Asia-Pacific session trading around the kind of 2030 type region And actually this morning we've traded all the way back down to 1873 So in fact from a gold perspective, this would be heading for the biggest two-day loss in more than seven years If this was to continue and so if we're looking firstly a couple of things to be aware of I'm going to talk through for one. Just having a look here where we bounced on the daily pivots around the s1 1873 and a half that doesn't capsulate for the down here on the far left of where we were trading as an era of resistance Turn support when we were grinding it out higher through mid July So some technical relevance and that that's an important first point I guess to make when there is a fast moving market like gold and it really is seeing a lot of momentum based trading like it Was yesterday then a lot of these short-term Speculators like to then just target flushes in price to certain key levels derived from technical significance. So The really prudent thing to do and one of the things I was talking about very early on Yesterday to some of the junior traders was about this idea of marking out these levels as far out as they might seem at that point in time Gold is the type of asset or product where it can really move when Yeah, this kind of CTA selling momentum based and it just gets ignitioned by then algorithmic trading And and we just the market gets hit quite hard now One of the things that is firstly just to cover off, you know, why exactly did it happen yesterday? Well, you know timing There wasn't one specific singular headline, but there's been a Combination of different things for one. Don't forget that as a product We've we've seen a massive push-up to the on the upside more recently So an idea of the market being overbought in the short term Looking to book profits if we start to see a meaningful type of Pull back then a lot of these short-focus type traders looking to bail on that trade just adds momentum exacerbates the downside Timings-wise, we've also had a couple of other things. I mentioned some of the data points in the US at the back end of last week have been Actually pretty good or surprising to the upside. I should say Then we've had the improving US COVID situation, which was really something I talked about in yesterday Today's briefing so continued improvements or be it the death toll level is still uncomfortably high The new case rate and hospitalizations has been declining Then you've got this a couple of other things the imminent flood of debt issuance Obviously, you know, it's phenomenal fiscal spending that the US Treasury are doing trillions of dollars has got to be financed through the issuance of debt and so What typically happens then when new debt comes to market then issuance adds to the supply and that can put downside pressure on prices You've then got as well and the main kind of emphasis here is the yield movement One of the underlying supportive factors here has been the the movement of negative real Rates which has been moving ever further south As the kind of prospects about the economic recovery such deteriorate the Fed obviously is in ultra accommodative mode And that's been an underlying support for just generally supporting precious metals, but the yields have been picking up and Yesterday as well coinciding with the gold move. We actually saw a really interesting development where Technically if I look at it on a daily continuation, we did see You know part of this gold movement and this is something that Alex was talking about in his video yesterday It was how we just put my video back on here was how The tenure has actually been leading if you like a lot of the the gold movement in terms of timing and as you Can see here We broke out of a significant technical upside range that had been restricting a lot of the price action post the initial March pandemic volatility back in towards middle of Middle to late July and then that preceded then the push on the break above 2000 that we had in gold now we we peat it out and and found Degree of resistance on three multiple three consecutive days really at around 140 13 and we've been backing down since Throw in that COVID improvement a couple of those data points And then the idea then if there's more fiscal stimulus coming by the way of although it's looking still apprehensive Getting a deal done soon. The ultimate understanding is that that there is going to be a deal at some point and so then If you look at it, we've just bumped down In prices yields are started to pick up and then we were we were very hesitant around this trend line in particular That broke it's gone down and you can see how technically then you got that extremity on the wick on the bounce as The market came back down and tested that 28th of July low as a near-term target And that coincided then with some of that pressure that continued to mount on gold So definitely it's a it's kind of a re-emphasis of a yield Story maybe expectations changing then about what does the second half of the year look like? And that's just how prices down Inevitably though if you think about it There are a couple of things here as a mechanism of what we've had yesterday the dollars a little bit firmer So if we talk about that first and then we'll talk about them the kind of more medium temperature for gold if you look at actually the euro Then obviously as yields move up the dollar will appreciate and the Dixie is off a little bit in the last hour or so But is up about two tenths of 1% and that's going to keep that long-term trend line We've been watching the euro probably in play as it's a strong level of resistance It's going to if we do see then this continue this this idea and in the in yields recovery At least in the short term that's going to put a big cap on the ability of euro to break that level Equally so then it's a similar story for cable Much of the dynamic here has been driven by the US narrative rather than stuff specifically for the UK Now we'll get round to the UK growth data that came out short while ago But again, we've seen cable just drift down as the dollars staged a bit of a recovery Which commenced yesterday coinciding with some of the moves that we had and so just keeping an eye on the bottom end of that range Which we were looking at from back on Monday, which is around that 130 lower bound from what we've been trading and there's been holding price through August thus far so back to gold and One of the things here then is You know, I guess a couple of things for a lot of inexperienced traders What could have been a very? Appetizing thing to do here is like right the markets come off very sharply. I'm just going to buy the dip Let's just buy the dip and and that in itself is particularly problematic because as you saw yesterday with the way and the violent nature of how quickly gold was moving the Ability to get accurate execution and to manage those trades in that environment if you're inexperienced is incredibly difficult It's kind of like trying to catch a falling knife. Can you catch a falling knife? Sure, you can if you tossed it and it's rotating And you've got to grip it really hard and you've got a chance of gripping the actual knife side or the handle side Can you do it? Sure, you can do it Well, if you're new and you're not used to spinning knives The likely it is you might just squeeze the knife end and cut your hand off. So The idea here then is like for any new traders is just understand now the risk associated with trading this market today's a difficult one and I would imagine that Given what we have last night I wouldn't be surprised that a lot of retail traders might have loaded up last night as as gold fell down through to 1927 which is a decent hundred dollar move on the day A lot of people might have just got long at that point and come in this morning Check their account and they've taken an almighty hit because they've just been hit by 50 bucks and another shift at the downside this morning The point being here is that look as much as appetizing as these moves may seem In retrospect the reality is trading them is very difficult And so, you know the art of execution comes with repetition screen time and experience So if you are in that camp and you're relatively new to this what I would convey is just stay clear You know look at it use it as a perhaps a barometer of general sentiment because when gold and an asset any asset moves Sharply in one singular day It does tend to absorb a lot of the market focus and therefore can dictate sentiment Generally on an intraday basis But just use it then as a signal or an indicator rather than then a tradable asset Parse because the likelihood is It's going to see more violent moves today as well So you take it with with that that kind of risk protocol in that in that sense What I thought I would do though is is break it down firstly and let's look at A little bit more of a zoomed in i'm looking at a 30 minute candlestick here So this is the dip here that was seen overnight in the asia-pacific session So we broke down through that late Let me just get in the lips here and I can talk you through give you a bit of a Timeline of what exactly he's been going on So here you had the asia low or excuse me the us late session low we broke that Shot down came back up to test at around a similar level before we pushed down to that Daily pivot level on the s1 and a bit of a bounce on that longer term level Which is over here on the left hand side, which takes us back to the 21st 22nd of july So which is just off your off the screen here on the left that we were just talking about So good support level now Which would be a key level on the downside if we were to move back back lower on the upside now here Just been looking from the decline that we had from the 24 Which was really capturing the bulk of the downward move from yesterday So a pretty steep Trend line and you can see we're just trading around there at the moment and that does coincide with Those previous support and resistance points so quite an interesting level here You can see the reason why the market's seeing a bit of a Hesitation here to make up its mind. Where does it want to go next? We are now though above that trend line So here if we are to push higher Looking on the upside then Probably be looking up at around some of these areas where prices reacted to before So if we were putting ellipses here if we push back on up Then these kind of areas capsulating here As you can see there was a good area of response to this level at around 1947 On the decline so anything that saw Good reaction on the way down You just need to flip it and look at it on the way up if the market were to continue on the upside Are we going to see a hundred dollar recovery today? I think personally no And so it could well even be the case that we come up a little higher and then the the downward short term Direction may continue But I would say once we start getting to the extremity of a hundred 150 dollar tight loss then inevitably a degree of recovery As people bail on those short shorts Starts to materialize so a bounce is probably at some point More likely than not Now over the medium term back to this picture which encapsulates then a little bit of the bigger Story and I'll remove my chart The idea here as per alex's video I do strongly suggest you go back and watch it because he goes into it in a bit more detail But if you think about it, you know, the Fed aren't going to change anytime soon What they're going to what they're doing with policy Um, and so with that point of view then, you know, they're going to continue to offer quantitative easing if anything offering even more because Their commitment at the moment is unlimited amounts of quantitative easing You've then got a us election on the horizon less than a hundred days away And the idea here then is that you know, if we look out in terms of some of the vix Structure further out encapsulating the period of say Going into the election and the weeks beyond It's already started to move and become elevated on the idea that we're going to have a particularly Nessie outcome no immediate result in a traditional sense And we could see a project protracted period of three to four weeks Um because of this mail-in ballot system And therefore that's going to create a heightened degree of uncertainty and volatility Most likely and so as a net result With all the geopolitical risks still ongoing with china and the us, of course They're going to meet but beyond that we tend to go through this trade cycle of positives and negatives And so there's big risks here And if you talk about china obviously the the sharpness of that rhetoric is probably going to increase Because it's a campaign situation and trump's really going to up the rhetoric if anything So plenty of risks there and plenty of reasons why over the coming months going into q3 q4 Plenty of reasons that gold should continue this bid tone that it's had So xing out yesterday which did occur of course I would still say that our view on the desk Is still that over that period in the second half of the year in particular as we get into ward then September october time going into november that gold should have an underlying support tone And if we push back up to all-time highs it would not be surprising at all at this point Elsewhere then silver Similarly getting hit badly yesterday dropped as much as 15 percent was heading for its biggest decline since october of 2008 A couple of things just looking at here again Same thing as we were looking on the ascent looking at the descent Which is then key technical levels to be aware of on the downside Now taking into account then the low that we have in 16th of march up to the run up just shy at the beginning of august of 30 dollars the 382 fib retracement would come in at around that key technical area actually of what was An area we're watching from a high back in october 2013 That was an area which the market did respond to when we were pushing higher just a few weeks ago So downside level that's a really key one if it remains heavy, but already as per gold You can see silvers having a bit of a bounce this morning as well So yeah, that's really the precious metal story Um, and hopefully that Encapsulates some of the the questions as to why it's happening of use of where it might go and how to handle it going forward But any questions just just let me know Okay, I'm going to have a quick run through of all the other headlines There are some other things to be aware of but I'll be quite quick just going through Um, I'm going to start then well, I've got a sequence of tabs. Let me just transition Tesla shares after market not sure if you caught it or not, but they were up Quite sharply after market they announced a Stock split so They're splitting its elevated shares in a five for one exchange In a time moved to make less expensive for individual investors So obviously they're getting to a point where their market cap of course has been increasing Incredible amount that shares have got you have moved almost astronomically higher over a very short period of time And so it's as seen as a as a positive move in order to allow then the more kind of Retail type trader to be at it or investor to be able to get into this share price Which is a key component of course to keep it elevated over the over the longer term Otherwise elsewhere the rbnz We've had the interest rate decision overnight And the kiwi dollar did get hit after the central bank said it would boost its kiwi program Basically to as much as a hundred billion kiwi dollars or 65 billion us And that's from a previous 60 billion. So they've gone up to 100 from 60 They also said that they would extend that out until june of 2022 And they said that their negative rates are in active preparation. So that was from the rbnz Otherwise elsewhere kamala harris brings prosecutors legacy to biden's ticket for better or worse Um, so this was very much as expected. She was the bookie's favorite So joe biden has chosen kamala harris as his running mate Benning that her tie is then for the african-american community and self branding as a progressive prosecutor Will help him in his bid for the white house um an interesting Take If you like a one-liner i saw from a political strategist This morning that was commented in the ft They said that if you look at the key swing states, which is always obviously Incredibly important for the deciding factor of an outcome of an election All of them except for arizona have noteworthy and important black voting blocks And if harris can help just a little bit in that regard She would have been a pretty Electrally helpful to biden in that respect That block really didn't show up in the ballot box Incredibly small numbers for hilary clinton back in 2016 comparative to what had been seen before for barrick obama There's a little bit of uh, I guess apprehension on the side of biden in regard to Harris has seen is particularly ambitious She's quite a fiery character in that sense. She's particularly good on political live debating So if that ever did we go back to a non virtual and more I guess normal environment should be particularly useful. I guess in this exercise But she herself was running for the democratic ticket as the main Candidate to run in the presidential race. So yeah, it'd be interesting to see how this plays out But certainly a strong strong character and personality Other things you've had The ft reporting that russi senak is weighing options to shelve his autumn budget This is obviously a really important one because it's going to talk about Defining then what's going to be the government strategy to help support the economic recovery going forward for britain But we're in the the mid of a second potential covid wave Hence the reason why there's talks about a potential postponement if that were to materialize It would probably be until the spring of 2021 Now that does not mean that we get complete silence from the treasury Senak would be expected to produce a mini spending review In the autumn allocating spending for departments for just a single year would would be how it would work Now one of the things here is around timing, of course Is that fears over a surge in unemployment when senak's existing furlough scheme ends in october Is going to be a particularly challenging time as well for the government to manage And that of course could lead to quite a large number of job losses, which then could render budget Pretty much invalid at that point thereafter. So perhaps a better strategy just to wait at this point Politically offsetting that saying it's covet, which is delayed it From a uk perspective, we've just had the uk gdp preliminary numbers come out for q2 minus 20.4 percent In line with expectations the manufacturing output 1 percent higher 11 against 10 percent expected uk construction output volume 23 and a half percent That was quite a bit stronger than expected 15.5 percent We have had a little Moderate bounce up in in cable, but i'd say so has the euro dollar currency pair as the as the dollar bid From yesterday just dissipates a touch. So yeah, I wouldn't read too much into the uk data overall Looking at the calendar, what have we got for today? Well, the uk days is already out. So moving further forward into the us session Obviously what will be interesting, of course, will be the the u.s CPI numbers given some of the new year old emphasis coming out of the u.s at the moment There's been a key component as to explaining why some of the gold movement has been occurring in the last 24 hours So that would be a key metric and then you've got the Regular department of energy infantry numbers just as a quick recap. You did have the apis last night So here they are we just removed that you had a drawdown of 4.4 million just a touch Deeper than expected cushing a bill just tomorrow around one million Gassing draw 1.31 to still it draw just around three million So look out for those later and then other than that you do have Feds rosengren speaking later on the u.s economy and current economic conditions, but there's a non voting member You've then got feds kaplan who is a voter Taking part in a q&a session at a bit 4 p.m. London and then feds daily later on this evening a non voting member Supply wise if you are training fixed income You've got a uk guilt 2028 auction and you've also got a bund auction for 4 billion euros as well coming out of Germany this morning And then as per what we were discussing with the issuance Being specifically this week You've got 38 billion in 10 year note auction as well coming this evening earnings wise You've already had eon pointing on the larger german caps to report this morning What did they say? Well, they cut their 2020 outlook as corona virus basically bites and Looking at the scoreboard here in pre-market activity Let me just give it a quick refresh. So we've got the latest numbers eon Well, it doesn't even register on the board of tops and flops now in terms of the DAC so pretty Lackluster movement on the back of that initially dipped but looks like it's recovered in pre-market All right, that is it so Yeah, good luck for the rest of the day If you're going to be looking at a gold as tempting as it is Just try and keep it tight if you're going to trade any type of recovery story on a bounce Just be mindful that the asset's still going to be incredibly volatile You know, if you are trading The type of product like a CFD for example Obviously if you're dealing with any product where it's not say the full future and you're trading a spread That spread is going to be big that the brokers are going to be offering today if you're in a retail environment And so your your your ability to execute will be impeded by that factor So just be particularly cautious with trying to trade it in very short bursts Look, there's going to be opportunities where they're much more smoother orderly price activity probably wants the dust settles By the end of the week, I would say so, you know, take it at your own risk Okay, guys. Have a good day. I'll catch you all tomorrow. Thanks very much