Narratives remain the same, and even if equity markets closed mixed with US and UK underperforming (Dow and FTSE -0.6%), the trend remains the same. Today, traders were more than happy to hit the pause button after what has been an impressive November rally so far.
I'm not sure the runway can get any smoother for liftoff. I just hope it's the same in January as I think the markets wind down earlier than normal this year.
Gold ETF In Focus
SPDR® Gold Shares (NYSE:GLD) ETF has been the biggest vehicle behind gold demand this year as many nontypical gold investors have dipped their toe into the golden pond. Where steady inflows chart topped 30 million ounces in early November before the vaccine hosed the gold market rally down, which many are now thinking for good.
ETF buyers are not like a central bank who will leave their bars in a vault collecting dust for decades, rather ETF investors are an extremely price-sensitive lot. Sizeable ETF selling in 2013 was an example of this – outflows weighed heavily on gold prices, exacerbating the correction amid the Fed taper tantrum. Although we are miles off from any hint of a fed policy pivot, it's essential to pay close attention to the key psychological level that triggered the upside momentum, and $1800 happens to be one the keenest levels of all. When the market broke $1800 in July, it was a virtual straight line up to 2060, suggesting a lot of ETF longs were accumulated on the move, hinting that we could be near a key pain threshold.
Korean Won
USD/KRW has traded 1104.7-1107.4 today, though mostly between1105 and 1106 range. The Bank of Korea left its key rate unchanged earlier today, as expected, and upgraded its 2020 and 2021 GDP growth forecasts. There were some comments from officials on FX, and USD/KRW went a bit higher on the back of these.
With USD/CNH rather stable, the downside in USD/KRW at 1100 should remain firmly supported as traders will be worried about BoK push back if that level gives.