The price of gold increases as bond yields decreases, while the Nasdaq 100 index forms a double peak pattern in anticipation of significant technology company earnings announcements
At the beginning of the week, the price of gold (XAU/USD) experienced a slight increase due to a weaker U.S. dollar and decreasing Treasury yields. However, this growth was limited by traders’ concerns about the Federal Reserve’s policy outlook, with Wall Street expectations fluctuating in recent days. As a result, XAU/USD rose 0.3% to $1,995 in afternoon trading but failed to recover from most of last Friday’s losses, which were caused by hawkish comments from central bank officials that led to a sharp decline in the value of this precious metal.
Despite a recent decline in value, gold remains a positive investment option over the medium term. Given the slowing U.S. economy and indicators signaling a potential recession, it is anticipated that the Federal Open Market Committee (FOMC) will soon conclude its tightening campaign. This is likely to result in a more rapid decrease in interest rates as traders attempt to anticipate the easing cycle, creating an advantageous climate for precious metals.
On Monday, the Nasdaq 100 experienced a decline following a nearly unchanged performance on Friday. This drop was greater than 0.7% in late trading in New York, which can be attributed to apprehensive sentiment before important corporate earnings reports. Microsoft and Alphabet are among the large-cap tech giants expected to release their quarterly results this week, prompting many traders to wait and analyze Corporate America’s outlook before investing further capital into risky assets.
The Nasdaq 100 has experienced a growth of over 20% from the lows of January. As a result, a significant portion of positive news has already been factored into stock prices. Consequently, companies in the technology industry will need to exceed earnings expectations by a considerable margin if they hope to maintain upward momentum and prolong the rally. Failure to do so may lead to an exodus of investors and a possible decline in the near future.
When considering Alphabet and Microsoft, it is expected that Alphabet will display earnings per share of $1.08 on a revenue of $68.87 billion, while Microsoft is projected to reveal EPS of $2.24 on sales of $51.12 billion. Those interested in additional information regarding upcoming corporate reports may consult DailyFX’s recently established Earnings Calendar.
NASDAQ 100 TECHNICAL OUTLOOK
The Nasdaq 100 has entered a bull market, as measured by price action, by exceeding a 20% increase from its 2023 lows. However, caution is advised due to the bearish double-top pattern that has recently emerged in the tech benchmark. This pattern is considered an ominous signal.
In the academic context, it is postulated that the Nasdaq 100 may experience a significant decline if the double top pattern is confirmed, potentially leading to a retest of the 12,500 level. The bearish configuration can be verified by observing a break below support at 12,835 as a crucial technical signal.
In the academic context, in case prices rise and continue to increase, there will be initial resistance at 13,200. If this barrier is surpassed, the double top formation will be rendered invalid and a rally towards 13,610 may occur. This level corresponds to 50% of the Fibonacci retracement of the decline between November 2021 and October 2022.
NASDAQ 100 TECHNICAL CHART
