Gold is back under pressure as the bulls keep buying up the US dollar. The NFP data will keep the Fed on the back foot in the battle against inflation. Gold could be destined for a significant drop in the coming days in US CPI. The gold price drifted lower into the close on Friday due to some of the bad news for the Federal Reserve that was revealed in the Nonfarm Payrolls report for the month of September with the Unemployment Rate, moving down to historically-low levels. This goes against their battle to restore demand-supply-side balance in the labour market in the face of inflation, meaning that strong rate hikes are a given for the foreseeable future and this is a headwind for gold prices vs. a flattening curve. This will make for another critical week for the days ahead with plenty of US calendar events, including the minutes f the prior Fed meeting, US inflation data and Retail Sales. We will open in Asia with the US dollar some 55 pips, or 0.5% higher than last week, as measured by the DXY index. The gold price starts out down 1% on Friday's business and  2% up on last week's open, leaving scope for a continued bearish correction in a strong US dollar environment as the following analysis illustrates: Gold daily charts The following are of the same daily chart but zoomed in:   As illustrated in the above charts, the price is correcting the dominant bearish trend and has slid outside of the prior, late August, dynamic trendline resistance. The harmonic crab pattern is bullish while the price remains in corrective territories above the recent lows of $1,614 and $1,659 daily lows.  However, as the last illustration in the series of daily charts above shows, the price is meeting resistance around $1,730 and is in the process of correcting towards an area of price imbalance between Friday's lows of $1,690 and $1,675, the latter which is close to a 50% mean reversion of the daily bullish impulse. This is a critical area of interest for the week ahead that guards a move towards the restest of the dominant counter trendline and the aforementioned recent daily lows.  Gold H1 chart The hourly chart shows that the price is well on its way towards the said price imbalance as it starts to move out of the area of consolidation and support below the counter-trendline, as shown in the chart above. If the US dollar bulls move in at the start of the week, then there could be a quick move into mitigating the price imbalance resulting in a move-in on last week's high of $1,675 and the support thereabout to $1,659 daily lows.  Gold M15 charts Zooming down to other 15-min charts, we have a potential meanwhile bullish scenario with the price moving beyond a meanwhile trendline resistance, although the dominant hourly trendline would be expected to cap bullish attempts below or slightly through $1,700 in the opening sessions of the week.  US dollar H4 chart The US dollar broke above last week's lows of around 112.75 which is a bullish feature for the week ahead that leaves 114.00 on the radar as long as 111.95/55 holds:  We have seen a 62% retracement in the September rally and an attempt to move higher again on the front side of a dynamic supporting trendline that is yet to give. There is a price imbalance in the grey area around 114.00 that the bulls can target for the week ahead into the Consumer Price Index (CPI). Analysts at TD Securities argued that the ''NFP should be broadly neutral for the USD at this time, and should defer market focus to the upcoming CPI report to stake a deeper claim in the near-term direction. We are wary that a move above 145 in USDJPY will compel FX intervention, which could be more likely given upcoming CPI (especially if stronger). That could introduce temporary USD drag. Nonetheless, the USD remains best in class, and we look to accumulate on dips.''

Markets are still digesting the repercussions of the Chancellor's "mini-budget". In the latest move, the BOE increased the amount of authorized buybacks through TECRF facility. That's the intervention launched to shore up the pound in the wake of the announcement of financial reforms. Despite a rebound in the later part of September, cable has resumed its longer-term downward trend against the dollar. However, that has been aided in large part by the unexpected drop in the US unemployment rate, which increased the bets that the Fed would raise rates by 75bps at its next meeting. Now, the main concern surrounding the budget appears to be the uncertainty. In that situation, the market often assumes the worst. As presented, the budget appears to increase spending (which is pro-inflationary), while reducing taxes (which questions the financial stability of the government). The combined response is to expect the BOE to hike rates more aggressively to fend off the expected increase in inflation. Bringing things back to reality Depending on how the "mini-budget" is financed, however, it could allay many of those concerns. The problem is that the key "detail" won't be available until the end of November, and the BOE will have to decide at their next meeting before that. It also opens questions of just how well planned this plan was, since the long wait is ostensibly to figure out where to get the financing for the spending. It doesn't inspire confidence that the government is issuing a plan to increase spending and cut taxes without having first ironed out where the financing for that will come from. In the meantime, there is rampant speculation that the government will cut government expenditures on a wide range of services, from pensions to government employment. That makes investors nervous, and likely would lead to even less popularity of an already unpopular government. The Labour Party, already leading in the polls, would be expected to radically change the financial situation. Getting the data in hand Government spending is included in GDP measures, meaning that if one of the ways to balance the budget is to reduce government outlays, it would put downward pressure on the leading measure of economic growth. Last quarter GDP was revised in the final reading to be barely positive at 0.2%, from a flash reading of -0.1%. On Wednesday, the UK reports August GDP, which is expected to come in at -0.1% compared to +0.2% in July. The BOE has warned that a recession is coming, and now traders are focused on the September data to see if Q3 will be the start of that. Employment figures On Tuesday, the UK will release September Claimant Count numbers, which are expected to show a relatively modest increase to 10K from 6.6K. Remember that the higher the number, the more negative it is for the markets, since it accounts for the number of people seeing unemployment assistance. The total employed figure from the rolling three months to July is also released at the same time, but is unlikely to move the markets despite a surprising forecast. The expected significant drop in employment is due to a technicality, of the unusually high number in April rolling off.

Historically, the final quarter has always been considered to be one of the most lucrative periods of the year for commodity traders – And once again, that trend, is certainly living up to expectations! It's no secret that the global markets have entered an exciting new phase in monetary policy as central bankers across the world ramped up their fight against rapidly surging inflation. After being criticized for being slow to recognize inflation, the Federal Reserve and its central-banking peers have embarked on their most aggressive series of rate hikes since the 1980s. As a result, aggressive moves specifically from the Fed in recent months have dramatically strengthened the dollar – raising concerns among leading economists that the U.S currency will be the next asset bubble to burst. According to Morgan Stanley – "such U.S dollar strength has historically always ended in some kind of financial or economic crisis" and that's the exact direction we are heading in again. In recent weeks, a long list of Wall Street banks and international organization from the United Nations, World Bank and IMF have warned that an overly aggressive Fed tightening policy, combined with a surging U.S dollar – "risks breaking the financial markets and inflicting worse damage globally than the financial crisis in 2008 and the Covid-19 shock in 2020". Growing backlash against the Fed comes at a pivotal moment – following a significant move from The Bank of England, who was forced to revert to back to unprecedented "Quantitative Easing" measures, in an emergency attempt to avert a full-blown global financial meltdown. The Bank of England's monetary policy U-turn sent over 27 Commodities ranging from the metals, energies to soft commodities skyrocketing to multi-month highs – with many notching up impressive double-digit gains in a matter of days. The Bank of England's actions represent the first big intervention from a G7 central bank in this monetary cycle to avert a global financial crisis – And it may not be the last! There can be no denying that the explosive combination of excessive fiscal debt, speculative asset bubbles and persistent inflation makes the current economic environment truly precarious. At the same time, the Federal Reserve is facing one of the worst predicaments of its existence as it continues hiking rates aggressively into a weakening economy. Whichever way you look at it, the writing is already on the wall. Sooner or later the Fed will have no other option, but to turn back on its money-printing presses and inject massive liquidity into an already inflationary environment. The big question now is will the Fed raise rates one more time this year, before reverting back to quantitative easing again? Only time will tell, however, the one thing we do know is that extraordinary times create extraordinary opportunities and right now, as traders we are amidst "one of the greatest wealth transfers ever in history". The time to start making money is now! Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:  

Selling has continued in European and US markets today, although at a less frenetic pace than we saw last week, says Chris Beauchamp, chief market analyst at online trading platform IG. Subdued move prevails across markets “The impact of Friday’s payroll report and its implications for Fed policy and the economic outlook continue to loom large over markets. While Friday’s knee-jerk move was perhaps an overreaction in the near-term, the overall outlook remains highly unfavourable to equities. Even the prospect of earnings season provides little comfort, since Q3 numbers are likely to be uninspiring while Q4 guidance will be cautious at best.” Stronger dollar cushions European markets “European stocks did better this morning, thanks perhaps in large part to the weaker pound and euro. But the fresh outrages in Kyiv are another reminder that European markets face an even tougher winter than those in the US, despite the massive support being provided by governments. The bounce is already fizzling out, with more pain for European stocks ahead this quarter.”

In the red are now the relations between the world's largest energy poles, after reducing the daily oil production by 2 million barrels as OPEC decided, adding a new ‘’headache’’ to Europe's energy security. That decision surprised all the analysts who expected a reduction of 1 million barrels. Simultaneously, with the prices of natural gas being very expensive due to Russia’s pipelines, they took advantage to sell their liquified natural gas. OPEC decided in its first one-on-one meeting since 2020 to cut production by up to 2 million barrels per day from November. Oil prices have fallen to around $90 a barrel from $120 in early June, amid growing fears of the prospect of a global economic recession. However, still not knowing how long will it last and with what intensity, predictions are useless for now. On the other side of the Atlantic, the US opposes such a move, as OPEC keeps oil prices high, resulting in inflationary pressures on consumers and production costs. More specifically, President Biden is disappointed by OPEC's short-sighted decision to reduce production quotas while the global economy deals with the continuing negative effects of Putin's invasion of Ukraine. At a time when maintaining global energy, supplies are of the most importance, this decision will have the most negative impact on low- and middle-income countries that are already struggling with high energy prices. President's work has helped lower gas prices in the US. At Biden's direction, the Energy Department will release another 10 million barrels from the Strategic Petroleum Reserve into the market next month, continuing the historic releases the President ordered in March. From an Elliot wave perspective, we will examine the Crude Oil chart to see the possible move shortly. Looking at the weekly chart, we see an upward move from $15.98 very strong one. Ideally it’s the V wave that will probably reach $147.02, since we see drop from $139.00 in three waves now at key support with subwave C. A break above the trendline resistance can cause acceleration higher. Get Full Access To Our Premium Analysis For 14 Days. Click here!

EUR/USD - 0.9735 Euro's selloff from 0.9999 (Tue) to as low as 0.9727 Fri after robust US jobs report suggests correction from Sep's 2-decade trough at 0.9537 has possibly ended and as 0.9790 has capped recovery, bearishness remains and a daily close below 0.9713 (61.8% r) would pressure price to 0.9684, then later 0.9636/40. On the upside, only a daily close above 0.9790 would risk stronger retracement towards 0.9816, break, 0.9835 Data to be released later: Australia AIG services services index, Japan market holiday. EU Sentix index. U.S. market holiday, Canada market holiday on Monday.