In November, the United States reported a capacity utilisation rate of 76%, slightly higher than the anticipated 75.9%. The data suggests an upward trend in industrial efficiency during the period.
The US economy grew at an annualised rate of 4.3% in Q3, surpassing analysts’ predictions of 3.3%. This growth may have contributed to the marginal rise in the capacity utilisation rate.
Gold Prices Surge
Gold prices increased sharply to $4,497, driven by a weak US Dollar and thin holiday trading. However, the precious metal’s gains moderated following the release of strong US GDP figures.
Bitcoin currently trades above the $87,000 support level, although broader cryptocurrency markets face persistent pressure. Altcoins such as Ethereum and Ripple note declines amid ongoing sell-offs.
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Given the high capacity utilization and a strong 4.3% Q3 GDP print, the U.S. economy appears robust. However, the U.S. dollar is softening, suggesting we are more focused on the Federal Reserve’s future path than on past performance. This situation creates a clear divergence that derivative traders can exploit.
Commodities and Forex Opportunities
The dollar’s weakness is fueling a major rally in commodities, with gold nearing $4,500 and silver breaking $71. We should consider buying call options on precious metals ETFs to ride this momentum, as this trend is likely to continue into the new year. This mirrors the price action we saw during the 2020-2021 period when monetary easing and a weak dollar sent hard assets soaring.
In foreign exchange, the Canadian dollar’s strength is a direct play against the greenback’s weakness. With Canada’s central bank showing cautious optimism, we see potential in buying CAD/USD call options or futures contracts. Thinned-out holiday trading can exaggerate these moves, so short-dated options could offer significant leverage in the coming sessions.
While stock indexes are showing pre-holiday optimism, we should be cautious about these low-volume gains. The CBOE Volatility Index (VIX) is currently trading near a yearly low of 12.5, making protective put options on the S&P 500 unusually cheap. Buying some January puts could be a prudent hedge against a potential sentiment reversal when full trading resumes.
The crypto market is telling a different story, with Bitcoin showing weakness above its $87,000 support level amid risk-off sentiment. The declining open interest in Bitcoin futures confirms a lack of buying conviction. This suggests a bearish or neutral stance is warranted, perhaps by purchasing puts or establishing short positions on crypto-related assets.
