Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Opening Bell: Gold Up On North Korea Risk; Oil Rally Ends

By (Pinchas Cohen/ OverviewJul 05, 2017 06:47AM ET,-gold-rose;-oil-finished-200199144
Opening Bell: Gold Up On North Korea Risk; Oil Rally Ends
By (Pinchas Cohen/   |  Jul 05, 2017 06:47AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

by Pinchas Cohen

Key Events

  • North Korean intercontinental ballistic missile (ICBM) test ignored by Asian equities and safe havens
  • Oil shows signs of ending correction, after strongest 9-day rally of the year
  • Fed Sceptics await FOMC Minutes for deeper truth

Gold Futures 5-min Chart
Gold Futures 5-min Chart

Even as investors sought the yen and gold for their safe haven status following North Korea's missile launch yesterday, Asian stocks rallied, led by automaker and tech sector gains.

Global Affairs

North Korea’s ICBM test, specifically on the US's Independence Day, was seen as an act of aggression and has led to the scheduling of an emergency session in the upcoming G-20 meeting.

The fact that shares in Japan were traded in a business as usual fashion—with its proximity to North Korea—while ignoring political risk, is another in a long series of recent examples of equity traders disregarding political risk.

Ironically, while the currency of a country exposed to risk would usually be sold off, the yen was temporarily rising because of its safe haven status, along with gold. However, both assets resumed their declines as risk appetite returned to markets.

While US equity investors were buying into the Fed’s reflationary outlook—a catalyst fueling all-time market highs—the recent momentum back into financials continues. The sector has assumed leadership on the prospect of a growing economy and its higher interest rates. Nevertheless, bond investors have been far more skeptical of the Fed's optimism. The FOMC minutes may reveal the realistic complexities of previous and additional interest rate hikes ahead of one of its primary gauges, Friday’s Nonfarm Payroll release.

Crude Oil Daily
Crude Oil Daily

Oil is in retreat, after nine straight days of gains. It should be noted that even during its longest consecutive advance of the year, there were days in which oil slid on an intraday basis but still closed higher.

Having said that, yesterday’s trading formed a doji, which often occurs before a reversal, as the trend slows. Indeed, the rally also had one of those, but still climbed sharply for another two days.

We've posted repeatedly over the past month regarding a plunge in oil, correlating our forecast with observations of a projected correction, and stipulated that at a minimum, the correction should test the moving averages.

Yesterday’s doji closed on the 50 dma (green), which also happened to be the support of the first trough of the year, which occured in March. A support which has been crossed is expected to turn into resistance, as traders remember the significance of that price level.

Additionally, a correction generally retraces 50-percent of the prior price movement. Between $52 and $42 there's a $10 difference. The correction from $42 to $47 is $5, exactly half of the prior price movement. Using this logic, the corrective objective has been met.

However, UBS analysts are expecting a 20-percent rally in the commodity by the end of the year based on overly negative sentiment and supply not being able to keep up with demand. They are also relying on the OPEC and NOPEC pledge to do “whatever it takes” to rein in production. This is odd considering OPEC shot down the Russian proposal to add another 3-month option to the existing deal. Still, the IEA monthly report states that demand overcame supply in the second quarter, and that should increase in the second half of 2017.

Up Ahead

  • Economists expect the Nonfarm Payroll report will show US employers added 175,000 workers in June, as wages increased proportionately to an market favorable to employees.
  • President Donald Trump is expected to meet Russian President Vladimir Putin and Chinese President Xi Jinping at the G-20 summit.

Market Moves


TOPIX 5-min Chart
TOPIX 5-min Chart

  • Japan’s TOPIX advanced 0.6 percent, erasing an earlier loss. Subaru (T:9632) rallied 3.7 percent and Toyota (T:7203) jumped 1.6 percent.
  • South Korea’s KOSPI rose 0.3 percent, with Samsung Electronics (KS:005930) rising 1.2 percent.
    • S&P 500 Futures were flat. The gauge rose 0.2 percent Monday in a shortened session before the July 4 holiday.
    • Stoxx Europe 600 slipped 0.3 percent, retreating for a second day after surging 1.1 percent on Monday.
    • The MSCI Asia Pacific index climbed 0.4 percent as of 8:18 a.m. in London, with tech shares contributing the most gains.
    • Australia’s S&P/ASX 200 Index fell 0.4 percent after soaring 1.8 percent Tuesday, its most since November 10.
    • Hong Kong’s Hang Seng climbed 0.3 percent as Geely Automobile Holdings (HK:0175) rebounded 2 percent. The Hang Seng China Enterprise Index (CEI) rose 0.6 percent.
    • China's Shanghai Composite rose 0.8 percent.


    DXY 60-min Chart
    DXY 60-min Chart

    • The Dollar Index rose 0.15 percent to 96.25, retesting yesterday’s high.
    • The British pound was steady at $1.2921.
    • The euro added 0.2 percent to $1.1366.
    • The yen was little changed at 113.26 per dollar, after climbing as much as 0.4 earlier in the day.
    • The Korean won was flat.
    • The Australian dollar was at 76.19 US cents, up 0.2 percent, after tumbling 0.7 percent Tuesday in the wake of the Reserve Bank of Australia’s decision to maintain a neutral policy stance.


    • Gold advanced 0.2 percent to $1,225.59 an ounce, paring an earlier gain of 0.5 percent.
    • WTI crude increased 0.1 percent to $47.13 a barrel. Oil has rallied more than 10 percent after falling into a bear market last month.


    • The yield on 10-year Treasuries fell two basis points to 2.33 percent. The rate rose five basis points Monday, after surging 16 basis points last week. The market was closed Tuesday.
    • Australian 10-year yields rose one basis point to 2.63 percent, after dropping five basis points in the previous session.
    • UK benchmark yields advanced two basis points to 1.27 percent. French and German yields were flat.
    Opening Bell: Gold Up On North Korea Risk; Oil Rally Ends

    Related Articles

    Jeffrey Halley
    A Game Of Two Halves By Jeffrey Halley - Sep 16, 2021 1

    We’re seeing a bit of this in financial markets at the moment. The US stock market roared back to life yesterday as the tier-2 NY Empire State Manufacturing Index for...

    Opening Bell: Gold Up On North Korea Risk; Oil Rally Ends

    Add a Comment

    Comment Guidelines

    We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

    •            Enrich the conversation, don’t trash it.

    •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

    •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

    • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
    • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
    • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
    • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
    • Only English comments will be allowed.

    Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

    Write your thoughts here
    Are you sure you want to delete this chart?
    Post also to:
    Replace the attached chart with a new chart ?
    Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
    Please wait a minute before you try to comment again.
    Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
    Are you sure you want to delete this chart?
    Replace the attached chart with a new chart ?
    Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
    Please wait a minute before you try to comment again.
    Add Chart to Comment
    Confirm Block

    Are you sure you want to block %USER_NAME%?

    By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

    %USER_NAME% was successfully added to your Block List

    Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

    Report this comment

    I feel that this comment is:

    Comment flagged

    Thank You!

    Your report has been sent to our moderators for review
    Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

    Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
    Continue with Google
    Sign up with Email