Tech selloff deepens. Could gold regain field?

00:00:00: Investors are rushing to the exit door as a technology sell-off deepens.

00:00:04: The Nasdaq hundred plunged more than six percent on Thursday with concerns over AI spending, ballooning debt and political scrutiny shaking confidence among investors.

00:00:14: Selective buying opportunities may emerge after this sell off but even diversification offers limited shelter if financial conditions keep tightening.

00:00:25: So in this environment, I question whether gold – the good old gold could finally benefit from the turmoil as forces that have been waiting on gold since.

00:00:39: So welcome to Swiss Coats, daily market talk.

00:00:42: It's Friday the sixth of November.

00:00:45: I'm Ipekos Kardashian and you're watching.

00:00:47: Stay with me if want hear more about what i think gold could become appealing again.

00:00:52: but before please keep in mind that opinions and analysis are my own.

00:00:56: this is not financial advice.

00:01:06: So, the technology sell-off accelerated yesterday pushing Nasdaq hundred down by an eye watering six point thirty six percent while the S&P five hundred shed more than full percent and the Korean Cosby Index is down another five per cent today.

00:01:21: The membership bubble there has indeed burst sometime near June this year already with investors heading toward exit all at the same time as everyone was already wondering when this AI frenzy and the frenzy around the memory chip stocks would come to an end.

00:01:37: It is possible that we have also reached a boiling point in Nasdaq and now value has just started evaporating.

00:01:44: Now, I hear hopes about Anthropics upcoming IPO That could somehow switch into the mood.

00:01:50: But i actually think that that IPO Could also get delayed if things start to Get really bad from this point on.

00:01:56: because look nasdaq hundred Is now In the correction territory having slid more than ten percent From its october peak And snp five hundred would join there if the sell-off extends toward a seven thousand and fifty mark.

00:02:11: Of course, the sell off in companies that have so long whetted investors' appetite could finally create buying opportunities at its discount when that day comes.

00:02:21: it's selective approach favoring companies with healthier balance sheets play.

00:02:27: So look at the free cash flow levels, Look at the debt levels, look at this CDS levels before going in.

00:02:34: but for macro investors that will become harder to achieve through technology heavy indices given massive spending and ballooning debt.

00:02:43: we have Brother AI themes, so diversification into high-quality sovereign bonds like U.S.

00:02:51: Treasuries and indices with greater exposure to value stocks such as FTSE hundred or MSCI World Value Index for example could help reduce dependence on that AI trade.

00:03:03: but even there these assets also remain vulnerable to brother selling pressure if financial conditions keep tightening.

00:03:11: And the financial conditions are tightening, by the way!

00:03:13: The Bank of England joined yesterday and major central banks that decided to go ahead with an interest rate hike.

00:03:19: They hiked interest rates by twenty-five basis points as expected wildly.

00:03:23: but decision was more hawkish than expected as all MPC members voted for the rate hike yesterday.

00:03:30: The latter comes as no surprise given rising cost off living in UK at a near term end to high energy price.

00:03:38: Today, the US will reveal its latest jobs figures after a data release earlier this week hinted at higher than expected job openings in the West and stronger-than-expected ADP report as well.

00:03:49: According to the latest Bloomberg survey The U.S economy may have added around sixty five thousand new nonfarm jobs during the month of October.

00:04:00: That's quite weak number mind you And could back the softening u.s jobs market narrative after the expected set off.

00:04:08: jobs data from US on the other hand, could soften the Fed doll's hands.

00:04:12: But inflation will still say.

00:04:14: last word regarding the Feds' next policy move whether the Fed will go ahead with another rate hike before this year ends or not.

00:04:23: The White House pressure for lower rates can also evaporate after the midterm elections.

00:04:29: Now, we are coming toward the end of a very eventful week.

00:04:32: We spend the week talking about how the midterm elections from U.S.

00:04:36: change market dynamics obviously.

00:04:38: We talked about negative impact on AI potentially easing effects on energy prices so this space will soon go back to moving along with Middle East headlines.

00:04:48: We talk about improved appetite for US treasuries as US treasury returns just come down and lower from their multi-decade high levels about the cheapening US dollar as a result of lower US yields.

00:05:03: And earlier in this episode, we also talked how U.S.

00:05:06: treasuries and value names could remain short of protecting against deeper technology sell-off if financial conditions tighten?

00:05:13: In that context I'm asking whether gold investors can gain some reassurance.

00:05:19: possibly because increased appetite for U.S.

00:05:21: treasuries and softer US dollar, with two early consequences of U. S midterm elections could fundamentally improve the short-medium term outlook for gold Because gold, remember has been under pressure since January this year.

00:05:35: The yellow metal spent most of the year retracing its multi-year gains after having flirted with the fifty six hundred dollar level on January twenty nine and the bulls got washed out by a sell off that initially hit technology stocks at that time right after Microsoft's earnings announcement hit the ground and investors discovered their technology losses Following that very moment for most of this year, the gradually rising US yields.

00:06:06: The gradually rising U.S.

00:06:08: really yields actually as inflation expectations remain mostly anchored near the Fed's two percent policy target so they're gradually rising.

00:06:16: u.s real yields prevented gold from turning to tables in his favor but now?

00:06:21: That positive trend and us real yields may have topped And that could be an interesting turning point for Gold.

00:06:27: In fact, one of the reasons that pushed US real yields this high was strong growth expectations for the US economy.

00:06:34: Strong growth prospects were supported by exploding government spending in the

00:06:39: U.S.,

00:06:39: an explosive AI build-out also led to record bond issuance from hyperscalars that further boosted the real sovereign yields.

00:06:50: both come under pressure.

00:06:52: Democrats are expected to question the pace of AI build-out in the US and could eventually take steps slow down the expansion for the deficit, while they will likely try to rein in U.S government's exploding deficit whether it is going through reposing to the military budget or tax cuts.

00:07:12: I don't know that please everyone but however they do Smaller fiscal impulse could temper US growth expectations.

00:07:23: As a result, the October fifth high in the

00:07:26: U.S.'s

00:07:26: ten-year real yield proved to be near term peak with further downside potentially supporting goal into next year.

00:07:34: Looking at a price chart, we'll go rebounded more than five percent following the US midterm elections.

00:07:40: The yellow metal is softer this morning as U.S.

00:07:43: dollar is better bit but returning past four thousand and fifty dollars per ounce mark which was the major thirty eight point two percent Fibonacci retracement on October twenty-twenty three to January twenty twenty six rally could be interesting for gold bulls because it's key support of goals long term bullish trend for gold's next bull run.

00:08:06: If the bullish case gathers momentum, so if real yields... we could see gold recover toward the forty-eight hundred and five thousand dollar per ounce area within next eight to twelve months.

00:08:17: And bulls would also benefit from additional support if equities sell off deepens, and inflation expectations

00:08:23: escalate.".

00:08:24: I note that for a longer run, the Gold's positive outlook remains intact – it has not changed!

00:08:29: It is obviously too early to tell whether US foreign policies will improve.

00:08:34: enough is back on board in the sense that China, among other E.M countries has been replacing its US Treasury holdings with gold especially since Russia saw it's own holdings frozen by the U.S after the Ukrainian war started.

00:08:52: Japanese have been selling their US Treasuries to prop up the end and Europeans need money for them to strengthen their own military partly due to the US weakening military support of the continent that is on war.

00:09:05: Always important here is that these non-price sensitive buyers are increasing their gold holdings regardless of the US real yields and that trend is not yet ready to reverse.

00:09:16: If you haven't watched my special episode on The Changing Relationship Between Gold & Real Yields since the Ukrainian War started, I'm going.

00:09:26: But this is all for this week.

00:09:28: I'm Ipekos Kardashian and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

00:09:34: I hope This Episode Of Market Talk Has Been Helpful And It Has Been Insightful To You.

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00:10:06: Until then good day trading and have a lovely weekend.

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