Gold Gains on Falling Yields, Nasdaq 100 rises to double top ahead of key tech scores

GOLD AND NASDAQ 100 OVERVIEW:

  • Gold prices rise on Monday, supported by a weak US dollar and dropping Treasury yields.
  • Meanwhile, the Nasdaq 100 slips on cautious market sentiment ahead of key corporate earnings, with Microsoft and Alphabet releasing quarterly results on Tuesday.
  • This article looks at the key tech stocks to watch in the Nasdaq 100 in the coming days.

The price of gold (XAU/USD) rose slightly at the start of the week, supported by a weaker US dollar and falling Treasury yields, but gains were limited as traders remained concerned about the Federal Reserve’s policy outlook and Wall Street expectations were in flux over the past few days. Against this backdrop, the XAU/USD rose 0.3% to $1.995 in afternoon trading, but failed to recoup most of last Friday’s losses as hawkish comments from central bank officials triggered a sharp sell-off in the precious metal.

Although gold has fallen below the $2,000 threshold and is down more than 3% from its April peak, it remains bullish in the medium term. Given the slowdown in the US economy and the recession signals from key market indicators, it is only a matter of time before the Federal Open Market Committee (FOMC) officially ends its tightening campaign. Once this happens, interest rates are likely to fall faster as traders try to get ahead of the easing cycle. This should create a favourable environment for precious metals.

Elsewhere, the Nasdaq 100 turned negative on Monday after a near-flat performance on Friday, falling more than 0.7% in late trading in New York on cautious sentiment ahead of key corporate earnings. With several major tech giants set to release their quarterly results this week, including Microsoft and Alphabet on Tuesday, many traders are holding back on the sidelines, waiting for Corporate America’s outlook before putting additional capital into risk assets.

The Nasdaq 100 is up more than 20% since its January lows, so much of the good news has already been reflected in prices. This means that earnings for the big tech companies will need to surprise significantly to the upside to revive momentum and continue the rally; otherwise, the bulls could bail in droves, setting the stage for a significant pullback in the near future.

Alphabet and Microsoft are expected to post earnings per share of $1.08 on revenue of $68.87 billion, while Microsoft is forecast to post earnings per share of $2.24 on revenue of $51.12 billion.

NASDAQ 100 TECHNICAL Overview

From a price performance perspective, the Nasdaq 100 moved into a bull market earlier this month after rising more than 20% from its 2023 low. Although this development is positive in itself, caution is warranted as prices have recently been forming a bearish double-top pattern, an ominous signal for the tech benchmark.

If the double top is confirmed, the Nasdaq 100 could be in for a steep decline, with a retest of the 12,500-level coming into play. As for the technical signals to watch, the bearish configuration would be confirmed by a break below support at 12,835.

However, if prices turn upwards and continue their rise, the first resistance is at 13,200. A rise above this barrier would invalidate the double top and pave the way for a rally towards 13,610, which is 50% of the Fibonacci retracement of the November 2021/October 2022 collapse.

NASDAQ 100 TECHNICAL CHART

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