Yields back up and gold melts down

In this week's Macro Insight I discussed...


Multiple factors impacting markets last week, resulting in choppy price action. Hedge fund liquidations, quant funds buying and mutual fund quarter end selling flows all playing their part in the wild market gyrations.

Higher US yields still weigh on the tech heavy NDX whilst mid-caps continue to correct after an explosive run since last November.

After the recent liquidation in Chinese tech stocks, the KWEB ETF looks quiet over sold in the short term, this may be time for a short term bounce with technical bullish divergences showing on the daily charts. Also China sentiment vs the rest of the world is at decade lows.

Oil had some wild swing last week, first on inventory and COVID concerns but then the Suez Canal blockage impacting transportation of around 2 million barrels per day. This now look resolved and will unlikely have any lasting impact. OPEC+ meeting on Thursday is the next major factor for the oil market. We still see the uptrend in prices as intact and take this dip as buying opportunity. Real assets vs financial assets are at 100 year lows according to a bank report, this suggests a portfolio allocation away fro bonds and into commodities looks sensible for the long term.

As we have been flagging, Gold remains weak and has re-tested the 1680 area. If this support can’t hold then it opens up a larger move towards 1570 next stop. With real yields likely to head higher into summer, we favour further downside in the precious metal.

Filmed on on Tuesday 30th March 2021.

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