GOLD Price Analysis – Sep 03, 2024
Daily Price Outlook
Gold prices (XAU/USD) continue their decline, trading around the 2490 level. However, this drop is attributed to a stronger US Dollar and rising US Treasury bond.
However, expectations of a potential US Federal Reserve (Fed) rate cut in September could support gold prices, as lower interest rates reduce the opportunity cost of holding non-yielding gold. Furthermore, ongoing geopolitical tensions in the Middle East may drive demand for gold as a safe-haven asset.
Looking ahead, the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) is set for release on Tuesday.
The key event this week will be the August US Nonfarm Payrolls (NFP) report, which could influence the Federal Reserve's decision on interest rate cuts and, in turn, affect gold prices in the short term.
Impact of Recent US Economic Data and Federal Reserve Expectations on Gold Prices
On the US front, the broad-based US dollar (USD) strengthened, and US Treasury bond yields rose on Tuesday as the US Bureau of Economic Analysis reported that the headline Personal Consumption Expenditures (PCE) Price Index increased by 2.5% year-over-year in July, matching the previous figure but missing the estimated 2.6%.
In the meantime, the core PCE, excluding food and energy, also rose by 2.6%, consistent with prior data but slightly below the forecast of 2.7%. Moreover, the US Gross Domestic Product (GDP) grew at an annualized rate of 3.0% in Q2, surpassing expectations of 2.8%. Initial Jobless Claims for the week ending August 23 fell to 231,000, slightly below the anticipated 232,000.
On the other hand, markets are currently pricing in a nearly 69% chance of a 25 basis points (bps) rate cut by the Federal Reserve in September, with a 31% probability for a 50 bps reduction.
Moving ahead, the US ISM Manufacturing PMI for August is expected to improve to 47.5 from 46.8 in July, while the Services PMI may decline to 51.1 from 51.4. Job additions for August are forecasted at 163,000, with the Unemployment Rate expected to decrease slightly to 4.2%.
Therefore, the stronger US dollar and higher Treasury yields could pressure gold prices down. However, expectations for a Fed rate cut and weaker PMI data might support gold, as lower rates reduce the opportunity cost of holding non-yielding assets.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading around $2,503, facing a critical juncture on the 2-hour chart. After breaking down from an ascending triangle pattern, the price has been hovering near the $2,503 level, struggling to reclaim its previous bullish momentum. This breakdown is significant as the ascending triangle was providing support around the $2,507 level, and the recent price action suggests that the bears are gaining control.
On the technical front, the pivot point is situated at $2,507, which is now acting as a critical resistance. Immediate resistance stands at $2,508, followed by stronger resistance levels at $2,514 and $2,517. On the downside, the immediate support is at $2,491, with subsequent support levels at $2,480 and $2,471. The 50 EMA, currently positioned at $2,508, is acting as a ceiling for the price, preventing any meaningful recovery.
The Relative Strength Index (RSI) is currently at 44.41, indicating neutral momentum but with a slight tilt towards oversold conditions. This could imply a potential reversal or consolidation phase if the selling pressure continues to mount. However, the key to watch is whether the price can break back above the 50 EMA at $2,508, which could signal a shift in momentum.
In conclusion, Gold's recent breakdown from the ascending triangle pattern around the $2,507 mark has opened the door for further downside potential. If the price remains below $2,507, the bearish momentum could accelerate, targeting the next support at $2,491 and potentially down to $2,480 or even $2,471.
Conversely, a recovery above $2,508 could challenge resistance levels at $2,514 and $2,517. For traders, an entry point could be considered at a sell position below $2,507, with a take profit target set at $2,492 and a stop loss at $2,517 to manage risk effectively.
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GOLD Price Analysis – Sep 02, 2024
Daily Price Outlook
Gold prices (XAU/USD) failed to stop their early-day decline, trading around $2,497.91 and hitting an intraday low of $2,490.12.
This drop is mainly due to a stronger US dollar, which gained strength as traders adjusted their expectations for significant Federal Reserve policy easing.
This change in outlook followed the release of the US July Personal Consumption Expenditures (PCE) Index, indicating a less aggressive stance on monetary policy.
Meanwhile, the increasing concerns about China’s sluggish economy, the world’s largest gold consumer, have intensified pressure on gold prices.
It should be noted that the Chinese Manufacturing Purchasing Managers' Index (PMI) fell to 49.1 in August, down from 49.5 in July and below the expected 49.5.
This decline signals a contraction in the manufacturing sector, further exacerbating downward pressure on gold prices.
Looking ahead, investors will closely monitor key economic data, including the US ISM Manufacturing PMI on Tuesday and the Nonfarm Payrolls report on Friday.
These reports are expected to be closely watched by traders for potential impacts on market trends.
Stronger Dollar and Lower Fed Rate Cut Expectations Weigh on Gold Prices
On the US front, the broad-based dollar rose to a two-week high on Monday, as traders lowered their expectations for aggressive interest rate cuts by the Federal Reserve.
Markets are now pricing in a 70% chance of a 25 basis point rate cut by the Fed in September, with only a 30% likelihood of a larger 50 basis point reduction.
Meanwhile, the US Personal Consumption Expenditures (PCE) Price Index for July rose by 2.5% year-on-year, matching the previous month's increase but falling short of the 2.6% expected by the market.
The core PCE, which excludes food and energy, increased by 2.6% year-on-year, also below the anticipated 2.7%.
Therefore, the stronger dollar and reduced expectations for aggressive Fed rate cuts put downward pressure on gold prices.
The gold market is impacted by the increased dollar strength and lower-than-expected inflation data, leading to reduced investor demand for the precious metal.
Geopolitical Tensions Drive Investors Towards Gold as Safe-Haven Asset
On the geopolitical front, a general strike has been called across Israel by the Histadrut labor federation, urging the government to negotiate with Hamas for the release of hostages held in Gaza.
This follows the recovery of six hostages' bodies, leading to widespread protests and mourning. Hamas claims Israeli airstrikes have killed some hostages, adding to the tension.
Meanwhile, Yemen's Houthi rebels have attacked a Panama-flagged oil tanker in the Red Sea, though no casualties were reported.
The UN reports that 87,000 children in Gaza have received their first polio vaccine dose, but calls for a ceasefire continue as airstrikes persist. The vaccination effort aims to protect over 640,000 children but is hampered by ongoing violence.
Therefore, the ongoing geopolitical tensions and violence, including strikes and attacks, can increase market uncertainty and drive investors towards safe-haven assets like gold. This could lead to a rise in gold prices as traders seek stability amidst the turmoil.
China's PMI Drop Pressures Gold Prices Amid Economic Slowdown
Gold prices are being pressured by concerns about China’s economy, the largest consumer of gold. In August, China’s Manufacturing Purchasing Managers' Index (PMI) dropped to 49.1 from 49.5 in July, missing the expected 49.5 and signaling a slowdown in manufacturing activity.
This decline suggests that the manufacturing sector is contracting, which negatively impacts gold prices because it reflects weaker economic conditions in China, leading to reduced gold demand.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,497.50, reflecting a decline of 0.30% as it remains under pressure amidst a strengthening US Dollar.
The 4-hour chart reveals that Gold is trading just below a key pivot point at $2,504.66, which serves as a critical level for determining the near-term direction.
A break above this pivot could see the precious metal testing immediate resistance at $2,514.84, with subsequent targets at $2,529.23 and $2,540.41.
However, the technical indicators suggest a bearish bias. The Relative Strength Index (RSI) stands at 40, indicating that momentum is leaning towards the downside but is not yet in oversold territory.
Additionally, Gold is trading below its 50-day Exponential Moving Average (EMA) at $2,512.02, reinforcing the bearish outlook. Immediate support is located at $2,491.71, with further levels at $2,480.08 and $2,471.29.
Given the current technical setup, traders may consider short positions below the pivot point at $2,504.66, targeting the $2,487.00 level.
Conversely, a break above $2,505 could invalidate this bearish view, paving the way for a potential rally towards higher resistance levels.
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EUR/USD Price Analysis – Sep 02, 2024
GBP/USD Price Analysis – Sep 02, 2024
Daily Price Outlook
During the early European trading session, the GBP/USD currency pair reversed its downward trend and turned bullish at around the 1.3135 level, reaching an intra-day high of 1.3146.
This upward movement is largely attributed to renewed selling pressure on the US dollar. The USD is under pressure due to increased market optimism and growing expectations of a dovish stance from the US Federal Reserve (Fed).
Meanwhile, the Bank of England (BoE) is anticipated to gradually lower interest rates later this year, which could support the Pound Sterling (GBP).
Investors are now focusing on upcoming economic data, including the US ISM Manufacturing PMI on Tuesday and the Nonfarm Payrolls report on Friday. These reports will be key for traders looking to gauge potential market impacts.
Impact of Fed Rate Cut Expectations and PCE Data on GBP/USD Pair
On the US front, the US dollar is facing renewed bearish pressure due to growing market optimism and increasing expectations that the Federal Reserve (Fed) might adopt a more dovish stance.
According to the CME FedWatch Tool, there is a 70% chance that the Fed will cut rates by at least 25 basis points at its September meeting.
However, the recent economic reports have led traders to rethink the likelihood of a significant rate cut by the Fed in September.
On the data front, July's Personal Consumption Expenditures (PCE) Index data showed a 2.5% increase year-over-year, matching the previous month’s reading but falling short of the 2.6% forecast.
Additionally, the core PCE Index, which excludes food and energy, rose by 2.6% year-over-year in July, consistent with the prior figure but slightly below the expected 2.7%.
These figures suggest that while inflation remains steady, it may not be weak enough to prompt a more aggressive rate cut by the Fed.
Therefore, the bearish US dollar and mixed PCE data could support the GBP/USD pair. However, the weaker dollar and uncertainty around aggressive Fed rate cuts might boost the GBP, leading to potential gains for the GBP/USD pair.
BoE's Gradual Rate Cuts Support GBP/USD Amid Cautious Approach
Another factor that has been boosting the GBP/USD pair is the Bank of England's (BoE) plan to gradually lower interest rates for the rest of the year.
This move is expected to support the Pound Sterling (GBP) and help it maintain its position in the market.
At the recent Jackson Hole Symposium, BoE Governor Andrew Bailey mentioned that the impact of inflationary pressures would be less severe than previously thought.
However, Bailey also cautioned against rushing into further rate cuts too quickly. This balanced approach aims to stabilize the GBP while managing inflation concerns.
According to Reuters, the BoE is taking a careful approach to ensure that any changes in interest rates are well-measured and do not negatively affect the economy.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.31347, showing a slight uptick of 0.02% in early trading. The currency pair is hovering just below the pivotal $1.3156 level, which serves as a crucial point in determining the next directional move.
The 4-hour chart indicates that the pair faces immediate resistance at $1.3188, which aligns closely with the 50-day Exponential Moving Average (EMA). A break above this level could push the pair towards the next resistance levels at $1.3227 and $1.3265.
On the downside, GBP/USD finds immediate support at $1.3119, with further support levels at $1.3078 and $1.3041.
The Relative Strength Index (RSI) is currently at 40, signaling that the pair is leaning towards a bearish trend, but is not yet in oversold territory. This suggests that there could be more room for downside movement if the pair fails to hold above the key pivot point at $1.3156.
Given the current technical setup, traders might consider short positions below $1.3156, with a potential target around $1.3111.
Conversely, a break above $1.3188 would likely invalidate this bearish outlook, potentially setting the stage for a rally towards the $1.3227 level and beyond.
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EUR/USD Price Analysis – Sep 02, 2024
EUR/USD Price Analysis – Sep 02, 2024
Daily Price Outlook
During the early European trading session, the EUR/USD currency pair reversed its downward trend, turning bullish at around the 1.1071 level and reaching an intra-day high of 1.1078.
This shift is primarily due to renewed selling pressure on the US dollar, driven by increased market optimism and expectations of a dovish stance from the US Federal Reserve (Fed).
Additionally, comments from European Central Bank (ECB) Governing Council member François Villeroy de Galhau, who hinted at the possibility of a rate cut in the upcoming September meeting, are influencing the EUR. This potential ECB rate cut could put additional downward pressure on the Euro (EUR).
US Dollar Faces Renewed Bearish Pressure Amid Dovish Fed Expectations
On the US front, the broad-based US dollar has struggled to maintain its early bullish momentum, facing renewed bearish pressure amid growing market optimism and expectations of a more dovish Federal Reserve (Fed).
The CME FedWatch Tool indicates a 70% chance of a 25 basis point rate cut by the Fed at its September meeting. However, recent economic data has led traders to reconsider the probability of a significant rate cut this month.
On the data front, July's Personal Consumption Expenditures (PCE) Index rose by 2.5% year-over-year, matching the previous month's figure but falling short of the 2.6% forecast.
The core PCE Index, which excludes food and energy, increased by 2.6% year-over-year in July, in line with the prior reading but slightly below the anticipated 2.7%.
These results suggest that while inflation remains stable, it may not be weak enough to justify a more substantial rate cut by the Fed.
Therefore, the renewed bearish pressure on the US dollar, coupled with stable yet insufficiently weak inflation data, supports a bullish outlook for the EUR/USD pair. Market optimism and dovish Fed expectations could drive further gains for the euro against the dollar.
Potential ECB Rate Cut Could Weaken Euro Against US Dollar
On the EUR front, European Central Bank (ECB) Governing Council member François Villeroy de Galhau recently hinted at a possible interest rate cut. According to Bloomberg, he believes there are "good reasons" for the ECB to lower its key interest rates in September.
Villeroy de Galhau emphasized that taking action at the upcoming meeting on September 12 would be both fair and prudent. He suggested that adjusting rates now could be beneficial for the Eurozone's economic stability.
This potential rate cut is being considered to support growth and address any economic challenges facing the region.
Therefore, the potential ECB interest rate cut could weaken the Euro against the US Dollar as lower rates might lead to reduced returns on Euro-denominated assets, making the EUR less attractive compared to the USD, leading to a decline in the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.10620, experiencing a slight gain of 0.02% in early trading. The currency pair is hovering near the pivotal level of $1.1070, which serves as a crucial point for determining the next directional move.
The 4-hour chart shows immediate resistance at $1.1101, followed by higher resistance levels at $1.1140 and $1.1189. A successful break above these levels could set the stage for further bullish momentum.
On the downside, immediate support lies at $1.1034, with additional support at $1.1000 and $1.0969. The Relative Strength Index (RSI) is currently at 42, suggesting that the pair is leaning towards a bearish bias but is not yet in oversold territory.
This implies that there may be room for additional downside movement if the pair fails to hold above the key pivot point at $1.1070.
The 50-day Exponential Moving Average (EMA), currently positioned at $1.1109, is acting as a resistance level, reinforcing the bearish outlook.
Given the current technical setup, traders might consider selling positions below $1.10831, with a potential target near the $1.10338 level.
Conversely, a break above $1.1101 could invalidate this bearish outlook, potentially paving the way for a rally toward $1.1140 and beyond.
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GBP/USD Price Analysis – Sep 02, 2024
GOLD Price Analysis – Aug 30, 2024
Daily Price Outlook
Gold prices (XAU/USD) have been unable to halt their downward trend, remaining under pressure around the $2,517 level and hitting an intra-day low of $2,512. This decline is attributed to stronger-than-expected US GDP growth, which has supported the US dollar and contributed to gold's losses.
The positive US growth report and Initial Jobless Claims have led to reduced expectations for a deeper rate cut by the US Federal Reserve in September. This was seen as a key factor that boosted the US dollar and weighed on non-yielding gold.
However, escalating geopolitical tensions in the Middle East and the ongoing war between Russia and Ukraine could increase safe-haven demand, potentially limiting further losses for the yellow metal.
Investors will closely monitor US inflation data for clues on the potential size of a Federal Reserve rate cut. The core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, is expected to rise by 2.7% year-over-year in July, up from 2.6% in June.
A softer-than-expected PCE reading could prompt the Fed to initiate a rate-cutting cycle, which would likely provide support for XAU/USD.
US Dollar Strength and Reduced Rate Cut Expectations Pressure Gold Prices
On the US front, the dollar is gaining strength due to a strong US growth report and better-than-expected Initial Jobless Claims. The US Gross Domestic Product (GDP) grew by 3.0% annualized in the second quarter (Q2), surpassing the initial estimate of 2.8%.
Additionally, Initial Jobless Claims for the week ending August 24 fell to 231K from 233K, coming in below the expected 232K. This economic strength has led to reduced expectations for a significant rate cut by the Federal Reserve in September, which puts pressure on non-yielding assets like gold.
On the other side, Atlanta Fed President Raphael Bostic indicated that it might be "time to move" on rate cuts if inflation continues to ease and the unemployment rate rises more than expected. However, he wants more evidence from upcoming jobs and inflation reports before making a decision.
Currently, markets are pricing in a 66% chance of a 25 basis points (bps) rate cut in September, with the likelihood of a larger cut at 34%, down from 36.5% before the GDP data, according to the CME FedWatch Tool.
Therefore, the strengthening US dollar and reduced rate cut expectations pressure gold prices, as higher economic growth and job data diminish the appeal of non-yielding assets. Gold may face continued losses if the Fed's stance on rate cuts remains cautious.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,519.84, down 0.07% on the day, as it hovers near the key support level of $2,512.36.
The metal remains caught in a narrow range, reflecting a lack of strong directional momentum. The Relative Strength Index (RSI) is neutral at 52, indicating that neither bulls nor bears have a clear upper hand in the short term.
Technically, Gold is positioned just above the 50-day Exponential Moving Average (EMA) at $2,515.16, providing near-term support. A critical pivot point lies at $2,529.23, which traders should closely monitor.
If the price breaks above this level, it could open the door to further gains, with immediate resistance at $2,544.34 and subsequent targets at $2,560.54.
The market’s indecision is highlighted by the tight trading range, with Gold consolidating between $2,512.36 and $2,529.23. This consolidation phase could precede a significant move.
Given the broader market context, a break above $2,529.23 could be an entry point for bullish positions, targeting $2,530 with a stop-loss just below $2,512 to manage risk effectively.
Conversely, a break below the $2,512.36 support could signal a bearish turn, potentially driving prices towards $2,500 and lower.
In summary, Gold's near-term outlook hinges on key levels.
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EUR/USD Price Analysis – Aug 30, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair extended its downward trend and remained well-offered around the 1.1069 level.
This decline can be attributed to the bullish US dollar, which gained traction due to upwardly revised US Q2 GDP figures, reducing the chances of a more significant Federal Reserve rate cut.
Furthermore, the previously released soft German inflation data has bolstered expectations for another ECB interest rate cut in September.
Meanwhile, the Eurozone flash annual Harmonized Index of Consumer Prices (HICP) declined as expected in August, which typically weakens the EUR by suggesting lower inflation pressures and potentially prompting the ECB to maintain or adopt a dovish stance.
Strong US Economic Data and Lower Rate Cut Expectations Boost USD, Weigh on EUR/USD
On the US front, the broad-based US dollar is gaining strength due to strong economic data. The US Gross Domestic Product (GDP) grew by 3.0% annually in the second quarter, surpassing the initial estimate of 2.8%. Besides this, Initial Jobless Claims for the week ending August 24 fell to 231K from 233K, coming in below the expected 232K.
This economic strength has reduced expectations for a significant Federal Reserve rate cut in September. The US Dollar Index (DXY), which tracks the dollar against six major currencies, is trading just below a fresh weekly high of 101.58 as investors await the US Personal Consumption Expenditure (PCE) Price Index for July.
Currently, financial markets are confident that the Fed might start reducing interest rates in September, but there is uncertainty about the extent of the cut. According to the CME FedWatch tool, there's a 33% chance of a 50-basis points cut, while others expect a 25-basis points reduction.
The likelihood of a larger rate cut has decreased slightly since the BEA reported a higher-than-expected GDP growth rate of 3% for the second quarter.
Therefore, the strong US economic data and reduced rate cut expectations have strengthened the US dollar, leading to a decline in the EUR/USD pair. The higher GDP growth and lower jobless claims support a firmer dollar, weakening the euro.
Eurozone Inflation Data and Economic Weakness Pressure EUR/USD
Another factor that kept the EUR/USD pair lower is the Eurozone’s inflation data for August, which shows a decline. The flash annual Harmonized Index of Consumer Prices (HICP) dropped to 2.2% from 2.6% in July, mainly due to lower energy prices.
Core HICP, which excludes volatile items like food and energy, rose by 2.8%, slower than the previous 2.9%. This weaker inflation data is likely to boost speculation that the European Central Bank (ECB) will cut interest rates again in September and potentially more later in the year.
Market expectations for an ECB rate cut increased after data showed that inflation in Germany, the Eurozone’s largest economy, fell to 2% for the first time in over three years. Additionally, Germany's economy contracted by 0.1% in the second quarter, suggesting a technical recession.
Other Eurozone countries, like France and Spain, also reported significant inflation declines. Analysts, such as Carsten Brzeski from ING, believe that the combination of fading inflation and weak growth makes a strong case for more rate cuts.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.10757, down 0.01% as it hovers just above a key support level at $1.10695. The market sentiment appears cautious, with the Relative Strength Index (RSI) at 40, signaling a slight bearish bias in the short term.
This reflects some downward pressure as the pair remains below the 50-day Exponential Moving Average (EMA) of $1.11355, indicating that the bears might still have some control.
The immediate pivot point at $1.11005 serves as a critical juncture for traders. A decisive break above this level could signal a potential recovery, with immediate resistance at $1.11395 and further targets at $1.11892.
On the downside, if the price slips below $1.10695, the next support lies at $1.10337, with additional support levels at $1.09995 and $1.09685. These levels are crucial for maintaining the current range, and a breach could open the door to more significant declines.
Given the current technical setup, traders might consider entering a long position above $1.10697, with a take profit target near $1.11188. A stop loss placed around $1.10430 could help mitigate downside risk if the support fails to hold.
Overall, EUR/USD is trading within a tight range, with the possibility of a breakout depending on how the price interacts with the $1.11005 pivot point. As the market awaits further directional cues, the pair’s movement around these key levels will be pivotal in determining the next trend.
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S&P500 (SPX) Price Analysis – Aug 30, 2024
Daily Price Outlook
The S&P 500 index experienced a subdued performance on Friday, August 30, 2024, struggling to maintain its upward trajectory.
This slight downturn was driven by mixed signals from key economic indicators and corporate earnings reports.
Although the U.S. second-quarter GDP growth was revised upward, signaling economic resilience, the optimism was not uniformly reflected across all sectors.
Furthermore, escalating geopolitical tensions, particularly in the Middle East and between Russia and Ukraine, have further intensified global uncertainty, dampening investor sentiment.
Fed Rate Cut Expectations and Economic Data Impact on S&P 500
On the US front, the Federal Reserve's monetary policy outlook and recent U.S. economic data have played a key role in shaping the S&P 500's performance. The revised U.S. GDP growth figure of 3.0% for Q2 was stronger than initially estimated, suggesting a robust economy.
However, this positive data was tempered by the market's focus on the upcoming inflation reports, particularly the core Personal Consumption Expenditures (PCE) Price Index.
Investors are closely watching these figures, as they could influence the Fed's decision on rate cuts. The market currently prices in a 66% chance of a 25 basis point rate cut in September, but stronger-than-expected economic data might reduce the likelihood of deeper cuts, which could weigh on the S&P 500.
Atlanta Fed President Raphael Bostic's comments on the need for more evidence before moving forward with rate cuts further added uncertainty, leading to cautious trading behavior.
This news contributed to cautious trading, leading to a slight downturn in the S&P 500 index as investors weighed the stronger-than-expected GDP growth against the uncertainty surrounding potential Federal Reserve rate cuts and upcoming inflation data.
Geopolitical Tensions and Their Impact on S&P 500
On the geopolitical front, escalating tensions significantly influenced the S&P 500's performance. Heightened conflicts, particularly in the Middle East and between Russia and Ukraine, have exacerbated global uncertainty, dampening investor sentiment.
However, the ongoing conflict in Ukraine, underscored by Russia's air attacks and Ukraine's heightened alert due to troop buildups near Belarus, has created a volatile backdrop.
Meanwhile, increased violence in the West Bank, with Israeli forces targeting militants, has raised concerns about broader regional instability.
Although these events haven't directly triggered sharp movements in the S&P 500, they contribute to a riskier environment, prompting investors to adopt a more cautious stance.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,591.95, virtually flat for the day, as it navigates a critical juncture near its key support level of $5,584.24.
The index is consolidating just above the 50-day Exponential Moving Average (EMA) at $5,576.84, which provides a near-term safety net for bullish traders. The Relative Strength Index (RSI) is neutral at 48, indicating a lack of clear momentum in either direction.
The immediate pivot point at $5,641.79 serves as a crucial marker. A breakout above this level could pave the way for further gains, with immediate resistance at $5,699.82 and additional targets at $5,754.94. These levels represent key hurdles that the bulls must clear to regain control of the market's upward momentum.
On the flip side, if the S&P 500 fails to maintain its position above $5,584.24, the index could see a slide towards the immediate support at $5,519.94. Further downside targets include $5,441.61 and $5,381.03, which could come into play if selling pressure intensifies.
Traders might consider entering a long position above $5,583, targeting a profit near $5,676, with a stop loss around $5,528 to limit downside risk.
In summary, the S&P 500 is at a technical crossroads, with its next move likely dictated by how the price interacts with the $5,641.79 pivot point. Market participants should closely monitor these key levels as they could set the tone for the index's short-term direction.
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GOLD Price Analysis – Aug 29, 2024
Daily Price Outlook
Gold (XAU/USD) extended its upward rally and remained well bid around the 2,523 level, hitting an intraday high of 2,524.49.
The strong bullish rally can be attributed to the revival of Chinese demand for the precious metal.
Gold likely gained support after data from the World Gold Council (WGC) on Tuesday showed that China’s net gold imports rose by 17% in July, marking the first monthly increase since March.
Additionally, fresh selling pressure on the US dollar was seen as another key factor that boosted gold prices.
The US Dollar Index (DXY) pulled back on Thursday, trading in the 100.90s, down from a peak of 101.18 reached on Wednesday.
Traders are now looking ahead to US Jobless Claims and Gross Domestic Product (GDP) data, set to be released on Thursday, for more clarity on the projected path of US interest rates.
Gold Gains on Increased Chinese Demand and North American Fund Inflows
On the China front, Gold's upward trend was boosted by increased demand from China. In July, China's net gold imports rose by 17%, marking the first monthly increase since March 2024, according to data from the World Gold Council (WGC).
This surge in demand is likely contributing to gold's recent strength. Additionally, a modest increase in net inflows of 8 metric tons ($403 million) from North American funds last week also supported gold prices. These factors, combined with the overall demand for gold, are helping to sustain its upward momentum.
Gold Gains Amid Weaker US Dollar and Anticipation of Key Economic Data
On the US front, the precious metal is benefiting from a weakening US Dollar (USD), as the US Dollar Index (DXY) is pulling back to the 100.90s on Thursday. Gold, which is negatively correlated with the USD, tends to rise when the dollar falls.
Traders are now awaiting US Jobless Claims and Gross Domestic Product (GDP) data for more insight into the future of US interest rates.
However, the jobs data is especially important after Federal Reserve Chairman Jerome Powell highlighted potential risks to the labor market from keeping interest rates high.
The GDP data is expected to remain steady at 2.8% for Q2, but any negative surprises could push Gold higher by suggesting that the Fed might need to lower interest rates sooner than expected.
Looking ahead, Friday could be a significant day for Gold as the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, will be released.
If the core PCE inflation rises to 2.7% as expected, it could suggest that the Fed will keep interest rates elevated, which may weaken Gold.
However, if inflation comes in lower than expected, Gold could see a boost. A risk to Gold's price is the extreme long positioning in the market, which could lead to a sharper decline if sentiment shifts, as noted by Daniel Ghali, Senior Commodity Strategist at TD Securities.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,517.26, marking a 0.52% increase on the day. The precious metal is showing resilience as it hovers just above the 50-day Exponential Moving Average (EMA) of $2,512.41.
This EMA level is crucial, acting as immediate support that has kept the bullish sentiment alive. The Relative Strength Index (RSI) sits at 56, suggesting moderate buying momentum, but not yet in overbought territory.
The pivot point is set at $2,530.00, serving as the primary threshold for any substantial upward movement. Immediate resistance is seen at $2,526.45, a key level that needs to be breached for the rally to gain further traction.
Should gold break this resistance, the next targets are $2,544.34 and $2,560.54, where the bulls could potentially extend their gains.
On the downside, the immediate support lies at $2,486.73. A breach below this level could shift the market sentiment to bearish, with further support levels at $2,471.29 and $2,455.47. These levels are crucial for traders to watch, as a dip below $2,455.47 could signal a deeper correction.
For traders considering a position, an entry above $2,512.00 appears favorable, with a take-profit target set at $2,530.00.
A stop-loss at $2,500.00 is advisable to mitigate downside risks. Overall, while the bullish momentum seems intact, the market remains in a sensitive zone, where breaking through either resistance or support could set the next directional trend.
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USD/JPY Price Analysis – Aug 29, 2024
USD/JPY Price Analysis – Aug 29, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair fluctuated around the 144.60 level. This range-bound behavior is expected to change with the upcoming US PCE inflation report and Japanese economic data.
The US PCE report could drive significant movement in the USD depending on the inflation figures.
Additionally, anticipated policy shifts from the Bank of Japan and the release of Tokyo CPI data may bolster the JPY. Traders are closely monitoring these factors to predict the future direction of the USD/JPY pair.
Market Focus: US PCE Inflation Report and Fed Policy Speculation Amid Upcoming Data Releases
On the US front, the market's focus is on the PCE inflation report, which is anticipated to drive the next major move in the US Dollar (USD).
The report will significantly influence speculation regarding the Federal Reserve’s (Fed) September policy meeting. According to the CME FedWatch tool, there is a strong expectation for the Fed to pivot towards policy normalization in September.
However, traders are divided on the magnitude of potential interest rate cuts, with the 30-day Federal Funds Futures pricing tool showing a 34.5% chance of a 50 basis points (bps) cut, while others favor a 25 bps reduction.
In addition, investors are closely monitoring revised estimates for Q2 Gross Domestic Product (GDP) and Initial Jobless Claims data for the week ending August 23.
The jobless claims data is particularly important as the Fed is increasingly concerned about weakening labor market conditions.
Japanese Yen Boosted by BoJ Rate Hike Expectations and Anticipation of Tokyo CPI Data
On the Japanese front, expectations of further interest rate hikes by the Bank of Japan (BoJ) are bolstering the Japanese Yen (JPY). BoJ Deputy Governor Ryozo Himino reaffirmed the bank’s commitment to adjusting monetary easing if economic activity and prices align with projections.
Additionally, investors are awaiting the Tokyo Consumer Price Index (CPI) data for August, scheduled for release on Friday, with forecasts predicting a steady 2.2% growth in the CPI, excluding Fresh Food.
USD/JPY - Technical Analysis
The USD/JPY pair is currently trading at 144.518, down by 0.06% as it flirts with the key pivot point set at 144.699.
This level will be crucial in determining the pair’s next move. The pair is trading near its 50-day Exponential Moving Average (EMA) at 144.505, which is acting as a critical support level.
The Relative Strength Index (RSI) is at a neutral 50, indicating a balanced market without a clear momentum bias at this point.
If the pair fails to hold above the 144.699 pivot point, immediate support is expected at 143.686, followed by deeper levels at 142.903 and 142.119. A sustained drop below these support levels could intensify the bearish sentiment, potentially leading to further declines.
Traders may consider entering a short position below 144.757, targeting 143.717 as the take-profit level while placing a stop-loss at 145.276 to manage risk.
On the upside, resistance starts at 145.303, a level that needs to be breached for any bullish momentum to gain traction. If the pair manages to break this resistance, the next targets would be 146.118 and 147.088.
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AUD/USD Price Analysis – Aug 29, 2024
AUD/USD Price Analysis – Aug 29, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6821 level, hitting an intra-day high of 0.6825.
This upward trend can be attributed to several factors, including a bearish US dollar, which lost traction due to the US Federal Reserve signaling that lower interest rates are likely on the horizon.
Additionally, hotter-than-expected Australian CPI inflation data have pushed back expectations of a rate cut by the Reserve Bank of Australia (RBA), providing some support to the Aussie.
Traders are now looking ahead to US Jobless Claims and Gross Domestic Product (GDP) data, set to be released on Thursday, for more clarity on the projected path of US interest rates.
Australian Dollar Strengthens Amid Mixed Economic Signals
On the AUD front, the Australian dollar (AUD) gained strength against the US dollar (USD) following hotter-than-expected inflation data. The country’s Consumer Price Index (CPI) eased to 3.5% in July from 3.8% in June, matching forecasts.
This unexpected inflation level led investors to push back their expectations for a Reserve Bank of Australia (RBA) rate cut, providing support to the AUD/USD pair.
In addition, Australia’s private capital spending fell by 2.2% in Q2, a sharp decline from a 1.0% increase in the previous quarter and worse than the 1.0% growth expected.
Spending on buildings and structures dropped by 3.8%, and plant and machinery saw a 0.5% decline. Investors are now looking to Australian Retail Sales data, due on Friday, for further guidance.
Therefore, the stronger-than-expected Australian CPI data reduced rate cut expectations, supporting the AUD.
However, the drop in private capital spending could weigh on the currency. Overall, the AUD/USD pair may see mixed signals with inflation supporting the Aussie and spending data dampening sentiment.
Impact of US Economic Data and Fed Signals on the AUD/USD Pair
On the US front, the Federal Reserve (Fed) is signaling that lower interest rates might be on the way, putting pressure on the US dollar (USD). Fed Chair Jerome Powell mentioned at Jackson Hole that it’s time for policy adjustments, influenced partly by weakness in the job market.
The upcoming US Nonfarm Payrolls report for August will be crucial, as it could provide insights into the labor market's health and impact the Fed's decision on interest rates.
The upcoming data is crucial for the AUD/USD pair. If the jobs report reveals further weakness or if GDP growth disappoints, it could lead to a weaker USD.
Additionally, the core Personal Consumption Expenditures (PCE) Price Index will be released on Friday, and if it rises to 2.7% as expected, it might lead the Fed to keep interest rates higher for longer, potentially strengthening the USD.
Conversely, lower-than-expected inflation could weaken the USD, supporting the Australian dollar. The AUD/USD pair is likely to react to these developments, with USD weakness providing potential support to the Aussie.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.68066, reflecting a 0.26% increase as the Australian Dollar gains traction against the U.S. Dollar.
The pair is showing a bullish bias, comfortably trading above the 50-day Exponential Moving Average (EMA) positioned at $0.6780. This moving average serves as a key support level, indicating that buyers have control in the short term.
The pivot point for the day is set at $0.6831, which also aligns with the first level of immediate resistance. A break above this resistance could open the door for further gains, with the next resistance targets at $0.6849 and $0.6869.
The Relative Strength Index (RSI) is currently at 60, suggesting a strong but not overextended momentum.
This indicates that there’s room for the AUD/USD pair to climb higher before reaching overbought conditions.
On the downside, immediate support is seen at $0.6773, just below the 50-day EMA. Should the pair drop below this level, additional support is found at $0.6752 and $0.6728. A break below these levels would likely shift the momentum to bearish, potentially inviting further declines.
For traders considering entering the market, an entry above $0.67955 looks favorable, with a take-profit target at $0.68312.
A stop-loss at $0.67732 is recommended to limit downside risk. Overall, while the short-term outlook remains bullish, traders should keep an eye on key resistance levels and the RSI for any signs of a reversal.
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USD/JPY Price Analysis – Aug 29, 2024