The S&P 500 faced fluctuations due to expected poor job creation and unemployment data. Although it took a brief dip, there was a recovery with strong tech performance and late-day buying.
The U.S. Dollar resumed decline, aiding the EUR/USD to rebound to around 1.1750 ahead of ECB monetary policy and U.S. Consumer Price Index decisions. GBP/USD showed recovery to near 1.3400 following UK inflation data, with expectations of a Bank of England rate cut.
Gold Maintains Upward Trend
Gold maintained its upward trend, trading near $4,340 amid market uncertainty as key events in Europe and the U.S. loomed. Bitcoin is under pressure, trading below $87,000, with concerns over a deeper correction if support levels are breached.
Monetary policy decisions have seen central banks like the Fed ease policies at consecutive meetings, whereas the BoE, ECB, and BoJ are currently in deliberations. Cryptocurrency markets, including Bitcoin, Ethereum, and XRP, continue to slide due to reduced risk appetite among institutional participants and other market pressures.
We’re seeing signs that sellers in the S&P 500 are getting tired, especially with that buy-back before the close. The pullback in the CBOE Volatility Index (VIX) from its weekly high of 22 down to 19.5 supports the case for a short-term relief rally. Consider buying near-term call options on the SPX to play a potential bounce heading into the year’s end.
The US Dollar Index (DXY) just broke below its 50-day moving average of 101.50, signaling more weakness ahead that could further support equities. With UK inflation data from November coming in at a soft 1.9%, the Bank of England is almost certain to cut rates this week. This makes buying put options on GBP/USD futures an attractive trade, anticipating a move toward the 1.3300 level.
Gold As A Safe Haven
Gold is the clear winner here, blowing past $4,330 as the primary safe haven amid geopolitical jitters and softening economic data. The Federal Reserve’s third consecutive rate cut on December 10th pushed real yields deeper into negative territory, a classic tailwind for non-yielding assets. We should look at buying call options on GC futures or bull call spreads to capitalize on this powerful upward momentum.
We are staying away from crypto for now, as institutional money is clearly flowing out. Data shows a net outflow of over $750 million from spot Bitcoin ETFs in the last week alone, and the price is struggling to hold the $87,000 level. Any break below this support could trigger a much deeper slide, making protective puts a prudent strategy for anyone still holding long positions.
