Today’s sample of Futures Analysis from

June Treasury Bonds closed sharply higher as equity markets collapsed and demand for safer assets increased. The rally early in the trading session sent yields plunging while triggering a breakout over the last main top at 121’05. T-Bonds began to break from the 121’14 high near the mid-session after triggering stops above the last main top at 121’05. Higher volatility and strong upside momentum should underpin the markets, but gains could be limited if traders decide to lighten up their positions ahead of Friday’s U.S. Non-Farm Payrolls Report.

June Gold finished higher after a successful test of a key 50% level at $1158.60 encouraged fresh buying. Gold initially broke after a strong rally in the U.S. Dollar. A break in equity markets also helped drive down demand for the metal. After testing the 50% level at $1158.60 and putting in a bottom at $1156.20, gold began to rally as the Euro plunged over 1%.

Speculators began buying gold as a hedge against a possible collapse in the Euro. The strong momentum late in the trading session could lead to a follow-through rally on Thursday. The only negative to the gold market at this time appears to be margin call selling. Should equity markets break sharply again, traders may have to sell gold to meet their margin calls in the equity markets.

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