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Interest Rate And Gold Futures Benefit From Current Conditions

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Stock index futures declined as the arrest of a top executive of Chinese tech giant Huawei for extradition to the U.S. from Canada triggered new doubts over the prospects of Washington and Beijing striking a deal in their 90 day truce period.

The November Automatic Data Processing employment change report showed a 179,000 increase, which compared to expectations of 175,000.

In the week ended December 1, initial weekly U.S. jobless claims declined 4,000 to 231,000. Consensus expectations called for initial claims to be 226,000.

U.S. worker productivity increased at a faster rate in the third quarter than initially estimated. The productivity of nonfarm workers rose 2.3% in the third quarter from the prior three months. That was an upward revision from last month's first estimate of up 2.2%.

The 8:45 November U.S. services purchasing managers' index is expected to be 54.4.

Two 9:00 central time reports are scheduled. The October factory orders report is anticipated to show a 2% decline and the November Institute for Supply Management nonmanufacturing index is estimated to be 59.

It will may take a while, but falling interest rates globally will ultimately rescue this market.


The U.S. dollar was higher in the overnight trade due to flight to quality buying after the arrest in Canada of a top executive of Chinese tech giant, which prompted fears of a flare-up in U.S.-China trade tensions.

The greenback weakened recently as traders assess the impact of falling U.S. interest rates.

A less hawkish Federal Reserve is likely to put a cap on the greenback.

The Canadian dollar is lower after Bank of Canada Governor Stephen Poloz said the benchmark interest rate will need to move higher, but the pace of future interest rate increases will remain decidedly data dependent given global risks and lower energy prices.

The Australian dollar fell due to its vulnerability to a worsening U.S.-China trade conflict.

There was additional pressure on the Australian dollar when the Reserve Bank of Australias deputy governor said a rapid economic policy easing would remain a weapon if it is needed. He said, while the central bank is indicating that interest rates will probably increase, that could change if economic conditions weaken.


Futures are higher across the board as traders seek safety in Treasuries.

Federal Reserve speakers today are Atlanta Federal Reserve Bank PresidentRaphael Bostic at 11:15, New York Federal Reserve Bank PresidentJohn Williams at 5:30 and Federal Reserve Bank ChairmanJerome Powellat 5:45.

According to the financial futures markets, the probability of a fed funds rate hike at the Federal Open Market Committees December 19 policy meeting is 71%, which compares to 78% yesterday.

Financial futures markets suggest the FOMC will increase its fed funds rate only one time in 2019

I expect the interest rate futures market will likely trend higher in the longer term, led by the thirty year Treasury bond futures. Also, the gold market is likely to be a beneficiary of falling interest rates.


December 18 S&P 500

Support 2645.00 Resistance 2718.00

December 18 U.S. Dollar Index

Support 96.550 Resistance 97.180

December 18 Euro Currency

Support 1.13250 Resistance 1.14170

December 18 Japanese Yen

Support .88410 Resistance .89120

December 18 Canadian Dollar

Support .74310 Resistance .75010

December 18 Australian Dollar

Support .7179 Resistance .7276

March 19 Thirty Year Treasury Bonds

Support 142^0 Resistance 143^16

February 19 Gold

Support 1238.0Resistance 1255.0

March 19 Copper

Support 2.7100 Resistance 2.7800

January 19 Crude Oil

Support 50.02 Resistance 53.45

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at Thank you.

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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. Past results are not indicative of future results or performance. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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About the author

Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at

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