GOLD Price Analysis – Sep 27, 2024
Daily Price Outlook
Gold prices (XAU/USD) came under selling pressure on the final trading day of the week, pulling back from the record high of $2,686 set on Thursday. The drop was primarily driven by renewed demand for the US Dollar (USD), which typically weakens gold's appeal.
In the meantime, the positive market sentiment, fueled by China's new stimulus measures, also turned investor interest away from the safe-haven asset.
Nevertheless, expectations of more aggressive Federal Reserve rate cuts are keeping the US dollar close to last week’s year-to-date low. Furthermore, the escalating geopolitical tensions in the Middle East limit gold's downside.
Traders are now focused on the upcoming US Personal Consumption Expenditure (PCE) Price Index for further market direction.
Impact of US Economic Data and Fed Commentary on Gold Prices
On the US front, the broad-based US Dollar saw a slight uptick due to increased buying, which typically reduces demand for gold. Federal Reserve Governor Michelle Bowman defended her decision to vote against a substantial rate cut in September, citing ongoing inflation risks.
Atlanta Fed President Raphael Bostic also urged caution against rushing into rate cuts, while other officials suggested that larger cuts could be on the horizon.
Meanwhile, Fed Governor Lisa Cook supported the recent 50-basis-point cut, acknowledging a decrease in inflation risks but raising concerns over rising employment challenges.
Market participants now see a more than 50% chance of the Federal Reserve cutting interest rates by 50 basis points at its November meeting.
Recent data from the Bureau of Economic Analysis revealed that the US economy grew at an annual rate of 3% in the second quarter, in line with initial estimates.
Meanwhile, the Census Bureau reported flat new orders for manufactured durable goods in August, though orders excluding transportation rose by 0.5%.
Moreover, initial jobless claims dropped to 218,000, the lowest since mid-May. While this data temporarily supported the USD, the Fed's overall dovish outlook has kept gold prices steady, with the upcoming release of the Personal Consumption Expenditure (PCE) Price Index potentially providing further support for gold.
Therefore, the mixed signals from US economic data and Fed commentary have created uncertainty, supporting gold prices.
Dovish Fed expectations could limit USD strength, making gold an attractive safe-haven asset, especially ahead of the upcoming Personal Consumption Expenditure Price Index release.
Geopolitical Tensions and Market Optimism Drive Gold Prices to New Highs
On the geopolitical front, escalating tensions in the Middle East and the potential for a wider regional conflict are driving gold prices to new all-time highs.
As a safe-haven asset, gold typically appreciates during periods of uncertainty as investors seek protection. However, a positive market sentiment, fueled by new stimulus measures from China, is diverting funds away from gold and into riskier assets.
This shift is diminishing demand for gold, as investors increasingly seek higher returns in other areas of the market.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,670.84, down 0.16% during today’s session, as it struggles to maintain its recent bullish momentum.
The precious metal is hovering around key technical levels, with immediate support found at $2,659.88. A drop below this could see further downside toward $2,653.43, while strong resistance at $2,677.76 will be the first hurdle for bulls to overcome.
The 50-day Exponential Moving Average (EMA) is currently at $2,664.45, providing short-term support. If Gold prices remain above this level, the bullish trend could resume, targeting the next resistance at $2,685.83.
A decisive break above this could open the door to test the psychological $2,700 mark. However, failure to hold the EMA could lead to further declines, with the next support seen at $2,646.49.
The Relative Strength Index (RSI) sits at 53, indicating neutral conditions. With room for further upward movement, the RSI suggests that Gold could still have some upside potential, especially if upcoming U.S. economic data triggers safe-haven demand.
However, a cautious approach is recommended as any break below $2,660 could trigger a sharper selling trend.
In conclusion, Gold’s near-term outlook hinges on its ability to stay above the 50 EMA and immediate support levels.
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EUR/USD Price Analysis – Sep 27, 2024
EUR/USD Price Analysis – Sep 27, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend, remaining under pressure around the 1.1158 level and hitting an intra-day low of 1.1125. This decline is attributed to the renewed strength of the US dollar, which gained momentum following positive US economic data.
Meanwhile, the euro's performance against other major currencies remains weak, influenced by the release of the flash French Consumer Price Index (CPI) and the Spanish Harmonized Index of Consumer Prices (HICP), both of which indicated that price pressures increased at a slower-than-expected pace in September.
US Dollar Strengthens Amid Positive Economic Data, Pressuring EUR/USD Pair
Despite Fed's overall dovish outlook, the US dollar is gaining momentum as the recent positive economic data reflects the strength of the US economy. The Bureau of Economic Analysis (BEA) reported a notable 3% growth in the US economy for the second quarter, indicating robust economic performance.
This growth, along with other favorable indicators, has increased confidence among investors and traders in the dollar's prospects.
In addition to the GDP growth, new orders for durable goods remained flat in August. However, a closer look reveals that orders excluding transportation increased by 0.5%, signaling resilience in certain sectors of the economy.
This suggests that businesses are still making investments despite broader economic challenges.
Moreover, initial claims for unemployment benefits dropped to 218,000, the lowest level since mid-May, highlighting a strengthening labor market.
A decrease in unemployment claims typically signals improved job security and economic stability, further supporting the dollar's upward trajectory.
Collectively, these indicators paint a positive picture of the US economy, reinforcing the dollar's position against other currencies and fostering optimism among market participants. Thus, the strengthening US dollar, driven by positive economic data, puts downward pressure on the EUR/USD pair.
EUR/USD Losses Intensify Amid Weaker Eurozone Inflation Data
Apart from this, the losses in the EUR/USD pair were further bolstered by the recent economic data indicating weaker inflation in the Eurozone. The flash French Consumer Price Index (CPI) showed an annual increase of only 1.5%, falling short of the expected 1.9% and significantly lower than the previous reading of 2.2%. On a monthly basis, the CPI also experienced a sharper decline of 1.2%, compared to the anticipated decrease of 0.8%.
Similarly, Spain's Harmonized Index of Consumer Prices (HICP) revealed an annual rise of just 1.7%, below the forecast of 1.9% and down from 2.4% in August, while the monthly HICP dropped by 0.1%, diverging from expectations for it to remain stable.
These disappointing inflation figures have heightened expectations that the European Central Bank (ECB) may implement another interest rate cut at its upcoming October meeting, marking the third reduction in its current policy-easing cycle that commenced in June.
With inflation pressures decelerating in both France and Spain, investors are now closely monitoring the preliminary German and Eurozone HICP data set to be released on Monday and Tuesday. The results of these reports will likely influence future ECB policy decisions and the trajectory of the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.11672, down 0.14% in today’s session, as traders remain cautious ahead of key macroeconomic data releases. The pair is hovering around the pivot point of $1.1164, a critical level that could dictate the direction of the next move.
Immediate resistance is seen at $1.1183, followed by $1.1198 and a more significant level at $1.1214. A breakout above these levels could trigger bullish momentum, driving the pair higher.
On the downside, immediate support lies at $1.1154, with further supports at $1.1140 and $1.1126. These levels will be crucial in maintaining the pair’s current uptrend.
The 50-day Exponential Moving Average (EMA) at $1.1162 is providing immediate support, aligning closely with the pivot point. A sustained move above this EMA could signal bullish continuation, while a break below could lead to a deeper correction.
The Relative Strength Index (RSI) is at 51, indicating neutral momentum. This suggests the pair could go either way, depending on how it interacts with immediate support and resistance levels.
If the RSI rises above 60, it could indicate a stronger bullish trend. However, a dip below 50 could shift the sentiment to bearish.
In conclusion, EUR/USD is at a critical juncture, with the potential for both bullish and bearish scenarios.
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GOLD Price Analysis – Sep 27, 2024
S&P500 (SPX) Price Analysis – Sep 27, 2024
Daily Price Outlook
The S&P 500 index has recently shown impressive performance, reaching around 5,745.37 and hitting an intra-day high of 5,767.37, driven by strong corporate earnings and resilient economic data.
Investors have reacted favorably to earnings reports, especially from major tech companies that surpassed market expectations. This trend highlights the ongoing strength of the U.S. economy, with sectors like technology and consumer discretionary showing robust growth.
In the meantime, the key economic indicators, such as a 3% GDP growth rate in the second quarter, have bolstered investor confidence.
This optimism has led to heightened buying pressure, pushing the S&P 500 to new highs and signaling a broader recovery in market sentiment.
Anticipated Fed Rate Cuts Fuel Optimism in the S&P 500 Index
Market participants are increasingly betting on a 50 basis points (bps) interest rate cut by the Federal Reserve in November, and this has a noticeable impact on the S&P 500 index.
The anticipation of this shift toward a more lenient monetary policy stems from mixed economic signals and ongoing worries about inflation.
The Bureau of Economic Analysis (BEA) reported 3% growth in the US economy for the second quarter, while new orders for durable goods stagnated in August.
However, orders excluding transportation rose by 0.5%. Meanwhile, initial claims for unemployment benefits dropped to 218,000, the lowest since mid-May.
Recently, comments from Fed officials like Governor Michelle Bowman and Atlanta Fed President Raphael Bostic have highlighted a cautious approach, but they also recognize that rate cuts might be necessary to support economic growth.
When interest rates drop, it usually gives a boost to equity markets because cheaper borrowing costs can encourage both businesses to invest and consumers to spend.
This speculation around potential cuts has added to the upward momentum of the S&P 500, with investors positioning themselves optimistically, hoping for a more supportive monetary environment in the near future.
China's Stimulus Measures and Their Impact on the S&P 500
China's recent announcement of new stimulus measures has brought a wave of positivity to the S&P 500 index.
In response to ongoing global uncertainties, the Chinese government is rolling out policies aimed at boosting economic growth, including tax cuts and increased infrastructure spending. These initiatives are designed to stimulate domestic demand and support local businesses.
As the world’s second-largest economy, China's economic health significantly influences global markets.
The introduction of these stimulus measures has rekindled investor confidence, resulting in a surge of capital flowing into U.S. equities.
Many investors believe that an uptick in China’s growth could lead to greater demand for U.S. exports, which would further bolster the S&P 500.
Therefore, the combination of strong economic indicators from the U.S., expectations of a rate cut from the Fed, and China’s proactive approach to stimulating its economy is creating a positive atmosphere for the S&P 500, helping it reach new heights.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,745.36, down 0.40% in today’s session, as markets remain cautious amid lingering economic uncertainty.
The index is hovering below its pivot point at $5,778.74, with immediate support seen at $5,704.50. If this level holds, the index could bounce back toward resistance at $5,766.23, and further gains may lead it to challenge $5,792.65 and $5,819.96.
Technical indicators are mixed, with the 50-day Exponential Moving Average (EMA) at $5,707.61 acting as a critical support level. A sustained move above the 50 EMA could indicate the resumption of the broader uptrend.
However, a failure to hold this level could see the index slipping further, with the next support at $5,676.00 and a deeper one at $5,648.18.
The Relative Strength Index (RSI) is currently at 61, signaling relatively strong bullish momentum. This suggests that the S&P 500 could find buying interest if it manages to stay above the key support areas.
However, given the current economic backdrop and the index trading below the pivot point, investors should remain cautious, as downside risks persist.
In conclusion, while the technical outlook remains slightly bullish, the S&P 500’s price action will largely depend on its ability to hold above the 50 EMA and immediate support levels. Traders should watch key levels closely, as any move below $5,704.50 could signal deeper corrections.
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EUR/USD Price Analysis – Sep 27, 2024
AUD/USD Price Analysis – Sep 26, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair halted its downward trend and turned bullish around the 0.6882 level, reaching an intra-day high of 0.6887.
This rebound is largely fueled by contrasting monetary policy outlooks from the Reserve Bank of Australia (RBA) and the Federal Reserve.
Moreover, the Australian Dollar received a notable boost after China, its largest trading partner, announced new stimulus measures aimed at reviving its economy.
Moreover, the RBA's decision to keep the Official Cash Rate steady at 4.35% provided further support for the AUD.
On the other hand, the Federal Open Market Committee (FOMC) recently cut the federal funds rate, which has heightened market expectations for more cuts before the year ends.
This divergence in policy direction has created a favorable environment for the Australian Dollar.
Potential Impacts of China's Stimulus on AUD/USD Pair Amid Domestic Challenges
China is set to inject over CNY 1 trillion into its largest state banks, which are struggling with shrinking margins, declining profits, and rising bad loans. This move marks the first major capital boost since the 2008 global financial crisis.
Meanwhile, the Reserve Bank of Australia's September 2024 Financial Stability Review indicates that the Australian financial system remains resilient, although concerns persist about stress in China’s financial sector and its limited responses to these challenges.
In Australia, a small but growing number of home borrowers are falling behind on payments, with about 2% of owner-occupier borrowers facing serious default risks.
In addition, Australian Treasurer Jim Chalmers plans to visit China this week to strengthen economic ties, highlighting the need to engage with key Chinese officials due to Australia’s vulnerability to the Chinese economy.
JP Morgan recently advised investors to keep an eye on commodities and bond yields, as China's stimulus measures could enhance global growth and reduce recession risks. However, they also warned about the potential for reinflation.
In Australia, the Monthly Consumer Price Index rose by 2.7% year-over-year in August, down from 3.5%, indicating shifting economic conditions.
Therefore, the news of China’s capital injection and stimulus measures could strengthen the AUD/USD pair, as improved economic prospects in China may boost demand for Australian exports. However, concerns over rising default risks in Australia may limit AUD gains.
Impact of Federal Reserve Rate Cuts on AUD/USD Trends
On the US front, Federal Reserve Governor Adriana Kugler expressed strong support for the Fed's recent decision to cut interest rates by half a percentage point. She indicated that if inflation continues to decrease as expected, further rate cuts would be appropriate.
This significant cut lowered the federal funds rate to a range of 4.75% to 5.0%, marking the first rate reduction in over four years.
The market is now pricing in about a 50% chance of an additional 75 basis points cut by the end of the year, potentially bringing the rate down to between 4.0% and 4.25%.
Traders are particularly attentive to the upcoming release of the final US Gross Domestic Product (GDP) Annualized report for the second quarter (Q2), which is set to be announced later in the North American session.
This data will be crucial in shaping expectations about the US economy and could influence future decisions by the Federal Reserve regarding interest rates.
Therefore, the Federal Reserve's interest rate cut and potential for further reductions may weaken the US dollar, potentially boosting the AUD/USD pair. However, the upcoming GDP report could introduce volatility, influencing market sentiment and short-term trading strategies.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) has gained 0.32% on the day, trading around $0.68417, reflecting some positive momentum in an otherwise cautious market.
The pair is currently moving below the pivot point at $0.6860, with the 50-day Exponential Moving Average (EMA) also aligned at this level, acting as a significant technical barrier.
Immediate resistance stands at $0.6907, which, if breached, could open the door for further gains towards $0.6946 and $0.6983, respectively.
On the downside, immediate support lies at $0.6819, with additional supports at $0.6783 and $0.6744. Traders are carefully monitoring the $0.6860 level, as it serves as both a pivot point and a key resistance zone.
A break above this level would likely invalidate the current bearish setup. The Relative Strength Index (RSI) is currently at 46, signaling neutral momentum with a slight tilt towards oversold conditions, which suggests the possibility of a rebound in the near term.
For traders, a sell limit entry at $0.6860 is advised, with a take-profit target at $0.68189, supported by the immediate downside levels. A stop-loss at $0.68879 would help mitigate risk in case of an upward breakout.
Overall, the AUD/USD pair remains vulnerable to downside pressure as long as prices stay below the 50-EMA.
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GOLD Price Analysis – Sep 26, 2024
USD/JPY Price Analysis – Sep 26, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has recently experienced a downward trend due to various economic factors and central bank signals.
Traders expect the US Federal Reserve (Fed) to cut interest rates further as inflation eases, which has weakened confidence in the US Dollar (USD) and led to its depreciation against the Japanese Yen (JPY).
In the meantime, the sharp drop in the US Consumer Confidence Index, from 105.6 in August to 98.7 in September, reflects this sentiment.
Meanwhile, the comments from Fed officials about potential rate cuts in 2024 have increased uncertainty, putting further downward pressure on the USD/JPY pair as traders await more economic data.
Japanese Yen Faces Downward Pressure Amid BoJ Delays
On the JPY front, the Japanese Yen (JPY) is facing downward pressure primarily due to expectations that the Bank of Japan (BoJ) will postpone further interest rate hikes.
Recent meeting notes from the BoJ showed that members agree on the importance of watching inflation closely. Some even proposed raising rates to 0.25% to lessen monetary support.
However, most members favor a careful approach, expecting interest rates to stay low for a longer time.
This uncertainty is affecting the JPY's value, making it less strong against other currencies, particularly the US Dollar (USD). Traders are waiting for more data to better understand the BoJ's future plans.
However, the market anticipates that the BoJ will maintain its accommodative stance, creating a challenging environment for the currency pair.
Traders are keenly awaiting upcoming inflation data from Tokyo, as it may offer valuable insights into the BoJ's future policy direction and potentially influence the JPY's performance in the near term.
US Dollar Faces Pressure from Rate Cut Speculations
On the US front, the broad-based US dollar is experiencing additional downward pressure due to increasing expectations for interest rate cuts by the Federal Reserve. The CME FedWatch Tool indicates about a 50% probability of a total of 75 basis points being cut by the end of the year, which has created uncertainty among investors. Federal Reserve officials, including Governor Adriana Kugler and Chicago Fed President Austan Goolsbee, have expressed support for additional rate cuts, which could further weaken the US dollar..
This environment of declining interest rates tends to diminish the attractiveness of the US dollar for investors seeking yield, resulting in reduced demand for the currency. Consequently, the expectations surrounding Fed policy shifts are adversely impacting the USD/JPY pair, leading to a challenging landscape for the dollar amidst ongoing market volatility and economic data releases.
USD/JPY - Technical Analysis
The USD/JPY pair is trading slightly higher at 144.877, marking a modest increase of 0.04% for the day. The pair is hovering near a crucial pivot point at 145.398, which could serve as a turning point for future price action.
Immediate resistance is found just above at 145.409, with further resistance levels at 145.973 and 146.514, which could become significant if the current upward momentum persists.
On the downside, immediate support stands at 143.968, followed by deeper supports at 143.475 and 142.910.
The 50-day Exponential Moving Average (EMA), currently at 144.016, is providing strong dynamic support, suggesting the pair will remain buoyed above this level.
Meanwhile, the Relative Strength Index (RSI) is at 66, signaling that the pair is nearing overbought conditions, a potential indicator of short-term exhaustion.
Traders may consider a buy limit at 144.478, targeting the pivot point at 145.398, with a stop loss at 143.978 to mitigate downside risks. The overall trend remains bullish, as long as the price stays above the 50-EMA.
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GOLD Price Analysis – Sep 26, 2024
GOLD Price Analysis – Sep 26, 2024
Daily Price Outlook
Gold (XAU/USD) continued its upward momentum, trading firmly around the $2,675 level and reaching an intra-day high of $2,675. This rally was fueled by several factors, including declining global interest rates, rising tensions in the Middle East, and a weakening US Dollar.
However, the speculation has increased regarding the US Federal Reserve's potential continuation of an aggressive monetary easing strategy.
Moreover, recent interest rate cuts by central banks, such as the People's Bank of China, Sweden's Riksbank, and the Czech National Bank, have enhanced gold's attractiveness.
Lower interest rates decrease the opportunity cost of holding gold—a non-yielding asset—making it more appealing to investors.
Fed Chair Jerome Powell's speech on Thursday is expected to attract significant attention from traders looking for hints about future rate cuts and their impact on XAU/USD.
At the same time, important US economic data, including the final Q2 GDP numbers, Weekly Initial Jobless Claims, and Durable Goods Orders, will provide more context about the economy.
Fed Rate Cut Expectations and Weak Dollar Propel Gold Higher
On the US front, the broad-based US Dollar has been losing momentum as markets increasingly expect another 50 basis point (0.50%) interest rate cut from the Federal Reserve in November.
Despite stronger-than-expected New Home Sales data for August and solid Mortgage Applications, there's little evidence the US economy is heading for a hard landing.
However, the Labor market data, like Thursday's Jobless Claims report, could play a crucial role in shaping market expectations, influencing both the US Dollar and Gold prices.
Currently, market-based odds for a 50 bps rate cut remain above 60%, according to the CME FedWatch tool, adding further pressure on the Dollar and boosting Gold, which is primarily traded in USD.
Another factor impacting sentiment is the sharp drop in consumer confidence. On Tuesday, the Conference Board's Consumer Confidence Index fell to 98.7 in September, well below expectations and August's upwardly revised 105.6.
Concerns about the labor market were a key driver of this decline. Traders are now looking ahead to Fed Chairman Jerome Powell's speech on Thursday for more clues about future Fed policy, which could have a big impact on Gold prices.
This news has boosted Gold prices as expectations of a 50 basis point rate cut and a weaker US Dollar increase Gold's appeal as a safe-haven asset. Dovish Fed comments and falling consumer confidence further support Gold's upward momentum.
Geopolitical Tensions and Global Rate Cuts Drive Gold Near Record High
On the geopolitical front, the escalating conflict between Israel and Hezbollah is pushing investors towards safe-haven assets like gold.
On Wednesday, Israeli Defense Forces chief Herzi Halevi told troops in northern Israel to prepare for a possible ground invasion of Lebanon, following continued missile exchanges.
If this invasion happens, it could increase global risk concerns, driving more demand for gold.
At the same time, gold is trading just below its record high of $2,670 per ounce, supported by recent interest rate cuts from central banks like the People’s Bank of China, Sweden's Riksbank, and the Czech National Bank.
Lower interest rates reduce the cost of holding gold, which doesn’t earn interest, making it more appealing to investors. These combined factors of geopolitical tension and lower rates are giving gold a strong boost in the market.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) continues its steady climb, trading near $2,662.67, up 0.18% for the day. The precious metal is navigating just below a critical pivot point at $2,670.00, reflecting strong bullish momentum, but immediate resistance at $2,670.90 could challenge further upward movement.
Should gold break this resistance, the next target lies at $2,681.48, followed by a higher ceiling at $2,691.20.
On the downside, immediate support is anchored at $2,643.40, offering a cushion for any pullbacks. Further support can be found at $2,633.40 and $2,623.81, levels that could come into play if the metal faces selling pressure.
The 50-EMA is currently positioned at $2,650.99, acting as a strong dynamic support. As long as gold remains above this level, the bullish trend is likely to continue. The Relative Strength Index (RSI) stands at 58, signaling neutral to slightly bullish momentum.
This suggests there is room for further upside without overbought conditions limiting the price action.
Traders are advised to consider entry points above $2,655, with a target of $2,670. A prudent stop loss around $2,645 would provide protection against downside risks. Overall, the outlook remains cautiously optimistic, with strong technical backing for further gains.
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AUD/USD Price Analysis – Sep 26, 2024
GOLD Price Analysis – Sep 25, 2024
Daily Price Outlook
During the European trading session, gold prices (XAU/USD) have struggled to rise and are holding steady around $2,600. However, the market mood has shifted, with more investors willing to take risks due to China’s new economic stimulus, leading them to seek better returns elsewhere, which makes gold less attractive as a safe investment.
Despite this decline, a significant drop in gold prices isn’t expected, as the Federal Reserve's plans to ease monetary policy are putting pressure on the U.S. dollar, making gold more appealing. Moreover, ongoing tensions in the Middle East and uncertainty in U.S. politics ahead of the November elections are also supporting gold prices.
Weak US Economic Data and Rate Cut Expectations Propel Gold Prices to New Highs
On the US front, the broad-based US dollar is facing pressure, with markets currently estimating over a 75% chance that the Federal Reserve will cut interest rates by another 50 basis points in November. This outlook has been reinforced by Tuesday's disappointing US economic data, which pushed the dollar closer to its year-to-date low. As a result, gold prices have surged to a new all-time high.
On the data front, the Conference Board's Consumer Confidence Index fell to 98.7 in September, down from 105.6 in August, indicating a decline in consumer sentiment. Meanwhile, the Present Situation Index dropped from 134.6 to 124.3. Moreover, a survey from the Richmond Fed revealed that manufacturing activity remains weak, with the composite manufacturing index declining to -21 in September from -19.
Traders are closely watching speeches from Fed officials this week, especially from Fed Chair Jerome Powell on Thursday, as these may provide insights into future rate cuts and influence market trends. Moving on, attention will also be on the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday, which is expected to affect demand for the dollar in the short term.
Therefore, the expectation of a Federal Reserve interest rate cut, combined with weak US economic data, has driven gold prices to new highs. As the dollar weakens, gold becomes more attractive, prompting increased demand for the precious metal as a safe haven.
Rising Geopolitical Tensions in the Middle East Increase Demand for Gold as a Safe Haven Asset
On the geopolitical front, the ongoing conflict in the Middle East, particularly between Israel and Palestine, is escalating tensions and impacting global markets. Israel's attacks on Gaza have resulted in significant civilian casualties, with reports of at least 12 Palestinians killed in just the last day.
The situation in Lebanon is also dire, with over 558 fatalities, including many children, due to Israeli airstrikes. The United Nations has urged Israel to refrain from attacking schools that serve as shelters for displaced Palestinians, following tragic incidents that left dozens dead in school attacks.
These developments have raised concerns about further geopolitical instability, which could support gold prices in the market. As tensions rise, investors often turn to gold as a safe haven.
Additionally, the uncertainty surrounding the upcoming U.S. presidential election adds to the complexity of the situation, making it more challenging to predict market movements. As of now, the ongoing conflict has resulted in a staggering number of casualties, with over 41,000 people reported dead and many more injured in Gaza.
The escalating conflict in the Middle East is driving investors towards gold as a safe haven asset. Increased geopolitical instability typically supports higher gold prices, as uncertainties, including the U.S. presidential election, further enhance demand for secure investments.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,652.43, down 0.18% as profit-taking and market uncertainty weigh on prices. The key pivot point lies at $2,657.23, indicating potential bearish momentum if prices remain below this level.
Immediate resistance sits at $2,670.90, with higher resistance targets at $2,681.48 and $2,691.20. A break above these levels could signal a shift to a bullish bias. On the downside, immediate support is at $2,648.18, followed by $2,640.19 and $2,631.56.
The Relative Strength Index (RSI) is neutral at 55, indicating neither overbought nor oversold conditions. However, a move below the 50 mark could indicate growing bearish sentiment. The 50-day Exponential Moving Average (EMA) is positioned at $2,637.30, offering solid short-term support. If prices break below the $2,648 support level, a drop toward $2,640 or $2,631 is likely.
Given the current setup, traders are advised to adopt a cautious stance. The entry price for selling is recommended below $2,657 with a take-profit target of $2,640 and a stop-loss at $2,674.
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GBP/USD Price Analysis – Sep 25, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair edged lower but held near the 1.3400 level as the US dollar continued to weaken, nearing its yearly low. This weakness is driven by expectations that the Federal Reserve might deliver one more significant interest rate cut before the end of the year.
Meanwhile, Investors believe the Bank of England (BoE) will gradually lower interest rates, as hinted by BoE Governor Andrew Bailey, who recently stated that interest rates are likely to decrease slowly.
Looking ahead, the focus will shift to the US core Personal Consumption Expenditures (PCE) data for August, set to be released on Friday. This is the Fed's key inflation measure, and economists expect core inflation to rise slightly to 2.7% from 2.6% in July.
US Dollar Weakens Amid Fed Rate Cut Expectations, Boosting GBP/USD
On the US front, the broad-based US Dollar is weakening, pushing the GBP/USD pair near its yearly high. The US Dollar Index (DXY), which measures the dollar’s value against six major currencies, is hovering around 100.20.
This decline comes as investors expect the Federal Reserve (Fed) to implement one more large interest rate cut in its remaining two policy meetings this year. The Fed recently cut interest rates by 50 basis points (bps), bringing them to a range of 4.75%–5.00%, in an effort to strengthen the labor market and return inflation to its 2% target.
According to the CME FedWatch tool, the Fed is expected to reduce interest rates by another 75 bps before the year ends, likely through one 50 bps cut and one 25 bps cut. The probability of a 50 bps rate cut in November has jumped to 59%, up from 37% a week ago.
Out of the 12 members of the Federal Open Market Committee (FOMC), only Fed Governor Michelle Bowman favored a more cautious approach with a smaller, 25 bps cut. These expectations are putting downward pressure on the US Dollar, benefiting the GBP/USD pair.
BoE's Gradual Rate Cuts and Inflation Concerns Boost GBP/USD
Another factor boosting the GBP/USD pair is the expectation that the Bank of England (BoE) will gradually lower interest rates. BoE Governor Andrew Bailey recently mentioned that the path for interest rates is likely to trend downward, but slowly.
He expressed confidence that inflation will return to the bank’s target of 2%, though he did not specify exactly where rates would settle. Bailey also assured that interest rates are unlikely to drop back to the historic lows seen during the pandemic.
In the UK, inflation has been close to the 2% target in recent months. However, high inflation in the services sector remains a concern for BoE policymakers. The Service Consumer Price Index (CPI), which is closely watched by the bank, increased from 5.2% in July to 5.6% in August.
This persistent rise in service sector prices is one reason the BoE is carefully managing rate cuts, ensuring that inflation across all sectors stabilizes before making significant changes.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.33989, down 0.11%, showing signs of consolidation following a modest decline in the previous session. The pair’s pivot point is set at $1.33831, indicating that a break above this level could signal renewed bullish momentum.
Immediate resistance is found at $1.34293, with further resistance levels at $1.34551 and $1.34885. A break above these levels could push the pair higher, signaling a potential short-term trend reversal.
On the downside, immediate support is seen at $1.33594, followed by key levels at $1.33310 and $1.32993. If prices fall below these levels, the GBP/USD pair could experience a deeper pullback, especially as market participants remain cautious ahead of key economic data releases.
Technical indicators show mixed sentiment. The Relative Strength Index (RSI) is currently at 53, indicating neutral momentum, though a dip below 50 would suggest increased bearish pressure. The 50-day Exponential Moving Average (EMA) is positioned at $1.33655, offering a critical support level for short-term trading.
Given the current technical setup, traders might consider entering long positions above $1.33831, with a take-profit target of $1.34280 and a stop-loss set at $1.33591.
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EUR/USD Price Analysis – Sep 25, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD pair climbed to approximately 1.1195, buoyed by a weakening US dollar amid growing speculation of a significant rate cut from the Federal Reserve in November. Market attention is focused on the upcoming releases of France’s Consumer Confidence and US New Home Sales data.
Meanwhile, Fed Governor Adriana Kugler is scheduled to speak. However, expectations of a potential interest rate cut from the European Central Bank (ECB) or any indications of economic weakness in the Eurozone may limit the Euro's (EUR) upward momentum against the USD.
USD Weakness and Fed Speculation Boost EUR/USD Outlook
On the US front, the US dollar (USD) is weakening as speculation grows about a significant rate cut from the Federal Reserve (Fed) in November. The Fed recently reduced its benchmark Federal Funds Rate by half a percentage point, bringing it to a range of 4.75% to 5%.
This decision was made due to progress on inflation and the changing balance of risks. As a result, investors are increasingly betting that the Fed will cut rates further in the upcoming meeting.
According to the CME FedWatch Tool, the market is pricing in a nearly 56% chance of a second 50 basis points (bps) rate cut in November, while the likelihood of a smaller 25 bps cut is around 44%. This uncertainty is adding pressure on the USD, making it less attractive to investors.
In addition to this, France’s Consumer Confidence and US New Home Sales data will be released on Wednesday, and Fed Governor Adriana Kugler is also set to speak, potentially influencing market sentiment further.
Therefore, the weakening US dollar due to speculation of further Fed rate cuts supports the EUR/USD pair, pushing it higher. Increased investor confidence in the Eurozone, coupled with upcoming economic data, could strengthen the Euro against the USD in the short term.
Euro Gains Amid Upbeat Market Sentiment, but ECB Rate Cut Concerns Loom
On the EUR front, the upbeat market sentiment is currently boosting the Euro (EUR) against the US dollar (USD). However, concerns about a potential interest rate cut by the European Central Bank (ECB) could limit the Euro's gains. ECB governing council member Klaas Knot stated that the bank plans to continue lowering interest rates at least through the first half of 2025, targeting a range between 2% and 3%. This indicates that further easing could be on the horizon.
Moreover, ECB policymaker Madis Muller mentioned that another interest rate cut next month cannot be ruled out. However, he emphasized that policymakers may not have enough data to make clear decisions regarding the struggling Eurozone economy.
This uncertainty could weigh on the Euro's performance. As a result, while the Euro benefits from the current risk appetite, any signs of weakness in the Eurozone or hints of additional ECB rate cuts may cap its upside against the USD.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.11872, up 0.07%, as it consolidates near recent highs. A break above the pivot point at $1.11983 could signal further bullish momentum, especially as traders eye immediate resistance at $1.12153. Additional resistance levels to watch include $1.12309 and $1.12485, which, if breached, could drive the pair higher in the short term.
On the downside, the immediate support level rests at $1.11618, followed by deeper supports at $1.11509 and $1.11350. The 50-day Exponential Moving Average (EMA), currently positioned at $1.11418, offers a strong support base, signaling a bullish outlook as long as the price remains above this average.
The Relative Strength Index (RSI) is currently at 65, indicating a bullish trend, but a move above 70 would signal overbought conditions, potentially leading to short-term profit-taking.
For short-term traders, a buy limit order around $1.11770 could provide an attractive entry point, targeting a take-profit level at $1.12153, with a conservative stop-loss set at $1.11626. This setup provides a balanced approach, capitalizing on upward momentum while safeguarding against downside risk.
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GOLD Price Analysis – Sep 24, 2024
Daily Price Outlook
Gold prices (XAU/USD) experienced a pullback after reaching a record high of around $2,640 on Tuesday, retreating toward the lower end of its daily range.
However, the rise in US Treasury bond yields has strengthened demand for the US Dollar, leading to profit-taking in gold amid slightly overbought conditions on the daily chart.
Despite this retreat, any significant decline in gold prices seems limited due to increasing expectations for more aggressive policy easing by the Federal Reserve (Fed).
Furthermore, ongoing geopolitical tensions, US political uncertainty, and a challenging global economic outlook are likely to sustain the safe-haven appeal of XAU/USD.
Traders are also closely monitoring Fed Governor Michelle Bowman's upcoming speech for further insights into future policy direction.
Anticipated Fed Rate Cuts and Economic Data Boost Gold Price Outlook
On the US front, there is growing belief that the Federal Reserve will lower interest rates by 125 basis points in 2024. This follows a recent 50 basis point cut that pushed gold prices to an all-time high.
According to the CME Group's FedWatch Tool, investors expect another significant cut at the November meeting. As a result, the US Dollar has struggled to recover from its lowest point this year.
Minneapolis Fed President Neel Kashkari stated that the focus has shifted from controlling high inflation to addressing potential job market weaknesses, which highlights the need for lower interest rates.
Meanwhile, Atlanta Fed President Raphael Bostic pointed out that recent data shows the US is moving toward stable prices, but there are rising concerns about the job market.
Chicago Fed President Austan Goolsbee added that job market declines can happen quickly, suggesting that keeping interest rates high may not be wise if stability is the goal.
On the economic front, a survey from S&P Global revealed that business activity in the Eurozone unexpectedly fell sharply, while US business activity remained steady in September.
Additionally, the flash US PMI report showed that prices for goods and services rose at the fastest rate in six months, indicating potential inflation risks.
Therefore, the anticipated rate cuts by the Federal Reserve are likely to support gold prices, as lower interest rates decrease the opportunity cost of holding non-yielding assets like gold. Additionally, rising inflationary pressures may further boost gold's safe-haven appeal.
Geopolitical Tensions and Economic Measures Impact Gold Prices
On the other hand, Israeli airstrikes on Monday targeting Hezbollah weapons sites in southern and eastern Lebanon resulted in nearly 500 fatalities, escalating the risk of a broader conflict in the Middle East.
This situation, combined with ongoing US political uncertainty and a gloomy global economic outlook, suggests that gold, as a safe-haven asset, is likely to experience upward pressure.
Investors typically flock to gold during times of geopolitical tension and economic instability, making it a popular choice for preserving wealth.
Moreover, the unexpected interest rate cut by the People's Bank of China (PBOC) and the passing of a temporary spending bill to fund the US government until December 20 have limited the rise in gold prices (XAU/USD).
These events show that even though there is strong demand for gold due to geopolitical tensions, supportive actions from major economies, such as China's rate cut and US fiscal measures, might prevent significant increases in gold prices in the short term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,628.47, up 0.25%, showing a steady upward movement during the Asian session. The price remains in a short-term bullish trend, supported by a 50-day exponential moving average (EMA) at $2,601.19.
Immediate resistance is situated at $2,640.67, followed closely by the pivotal resistance level at $2,651.94. A break above these levels could propel the price to the next major resistance at $2,663.95.
On the downside, immediate support lies at $2,605.40, with further key supports at $2,593.64 and $2,581.15.
From a technical perspective, the RSI (Relative Strength Index) stands at 58, reflecting moderate bullish momentum without nearing overbought conditions. This indicates room for further gains before any potential pullback.
The key pivot point at $2,652.00 suggests that this level could be the critical threshold for bullish continuation.
Overall, a buy position above $2,623 could target the $2,652 resistance level, with a potential stop-loss at $2,607 to manage downside risk.
The price action suggests further bullish movement as long as gold remains supported by the 50 EMA and the broader sentiment around safe-haven assets remains intact amid global economic uncertainty.
Gold remains bullish above $2,623, with $2,652 as the next key target, supported by a strong technical setup and favorable market sentiment.
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