The US stock futures are surging again today, as traders are ready to push the stocks even higher. This is despite the fact that the US stocks made another record high yesterday. All of this is taking place on the back of positive optimism among traders who feel pleased that the US economy has plenty of support from the fiscal and monetary policy side. Yesterday, the House passed a bill to increase the direct payment of cheques to Americans to $2,000 from the previous level of $600. However, the GOP-led Senate still needs to deliver the final verdict, and it is unlikely for any increase to take place.
Nonetheless, the fact is that after yesterday’s stock market rally, the S&P 500 is up over 15% year-to-date. The Dow Jones has surged nearly 6% YTD. As for the Nasdaq index, the tech index, it is up over 40% YTD. The rally in the Nasdaq index is primarily led by big names such as Apple, Amazon, Facebook, Netflix, and other work from home stocks.
On the coronavirus front, the vaccine rollout continues in the US. This is making investors comfortable that the worst may be over in the US, and the pandemic may have passed its climax. However, the new coronavirus cases are surging to a record level once again, representing the threat of further regional lockdowns. Suppose the lawmakers decide to take any such actions, and a lockdown is re-introduced. In that case, it is highly like to leave an adverse influence on the US economy and dent the consumer and investor sentiment.
In the commodity space, gold, the safe-haven play’s price is up over 24% YTD, The gold price failed to cross above the 100-day SMA on the daily time frame yesterday, and this confirmed that the bulls are lacking their strength. Hence, the precious metal’s price is trading lower today. Having said that, according to the latest COMEX gold and silver contracts reported in yesterday’s US Commodity Futures Trading Commission report, hedge funds and money managers have once again increased their bullish bets on gold. This means that sophisticated investors are expecting the gold price to rise in the coming weeks or quarters. This could be purely because they expect the risk-on trade to cool off as we start the New Year. Gold holdings in the world’s largest gold backed exchange-traded fund, SPDR gold Trust also confirms an increase in holdings; it rose to 1,169.86 tonnes from 1,167.53 tonnes.
As for the black gold, Brent oil prices have crossed the 50-dollar mark once again, and currently, the price is trading above 51-dollar mark. Oil prices are on track to record four consecutive days of gains. Investors are optimistic about oil prices, and they believe that the pandemic relief aid package along with the coronavirus vaccine should continue to improve oil demand. There is also optimism about the tightening of oil supply, and traders believe that the US crude oil stockpiles should continue to see more tightening. There is also a meeting between the OPEC+ members on January 4th, and this is the key event for oil prices between now until Jan 4th. It is expected that the group will start scaling back from its oil production cut, and it will increase the oil production by nearly a half-million barrels per day in January.
The digital gold, Bitcoin, seems to have exhausted its upward move, and it seems like that a healthy retracement may be on the cards. Looking at the weekly and daily time frame, the relative strength index indicates that the prices are very much overbought, and a retracement is due. So, it is possible that a top may be in place for now, and we continue to see the price grind lower or other best possible scenario is just consolidation.