GOLD Price Analysis – Aug 28, 2024
Daily Price Outlook
Gold prices (XAU/USD) are currently trading slightly above $2,500, facing a decline as the US Dollar (USD) rebounds. The modest recovery in the Greenback, evidenced by the US Dollar Index (DXY) rising over 0.3% to the 100.90s, is impacting the precious metal.
Investors are now turning their attention to upcoming US economic data, including the Personal Consumption Expenditures (PCE) Price Index on Friday, and the second estimate of the US Gross Domestic Product (GDP) for Q2 on Thursday, for further indications on the Federal Reserve's (Fed) interest rate trajectory.
Additionally, remarks from Atlanta Fed President Raphael Bostic on Wednesday may offer more clues on potential policy moves.
Impact of US Economic Data and Interest Rate Expectations on Gold Prices
On the economic front, the mixed data released this week has provided a nuanced outlook on the US economy.
While the Conference Board's US Consumer Confidence Index rose to 103.3 in August, beating expectations, the Richmond Fed Manufacturing Index for August disappointed, coming in at -19 compared to the forecasted -14.
Meanwhile, US housing data also showed mixed results, with a slight decline in house prices month-over-month but a year-over-year increase exceeding estimates.
Despite these mixed signals, the probability of the Fed enacting a significant 0.50% interest rate cut in September remains stable, as reflected by the CME FedWatch Tool.
The potential for such a rate cut could support gold prices by reducing the opportunity cost of holding non-interest-paying assets like gold.
However, the recent rise in short-term US Treasury yields suggests some market skepticism about the likelihood of a large rate cut, which could limit gold's upside.
Geopolitical Tensions and Investor Positioning Weigh on Gold Prices
In addition to economic factors, gold's price movements are also influenced by investor positions and geopolitical tensions.
According to Daniel Ghali from TD Securities, the current high level of investor interest in gold is worrisome because it’s similar to the extreme levels seen during the pandemic. This could put gold prices at risk of falling.
Meanwhile, the geopolitical tensions, which usually support gold prices, haven’t been strong enough to counterbalance the negative impact of a stronger USD and high investor positions.
As traders wait for more information on the Federal Reserve’s interest rate decisions and upcoming economic data, the short-term outlook for gold remains uncertain.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,506.82, down 0.34% for the day. The 4-hour chart reveals a cautious market sentiment, with the price struggling to find solid ground amid a broadly mixed trading session.
The immediate support level is situated at $2,486.73, which aligns closely with the lower boundary of a key support zone. Should gold breach this level, it could further decline toward $2,471.29, followed by the next support at $2,455.47.
On the upside, immediate resistance is observed at $2,526.45, a level that has previously acted as a pivot point in recent sessions.
A break above this could propel gold towards the next resistance levels at $2,544.34 and potentially $2,560.54.
However, with the Relative Strength Index (RSI) hovering around 47, the momentum is slightly bearish, suggesting limited upside potential unless new buying interest emerges.
The 50-day Exponential Moving Average (EMA) at $2,505.82 is currently offering a thin layer of support.
If gold can maintain a position above this moving average, there is potential for a rebound. However, a decisive break below the $2,505 mark could open the door to further downside risks.
Given the mixed technical signals, traders may consider buying above $2,505, targeting the $2,525 level, with a stop loss placed at $2,493. This setup allows for a calculated risk while capitalizing on a potential short-term bounce.
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EUR/USD Price Analysis – Aug 28, 2024
EUR/USD Price Analysis – Aug 28, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair struggled to halt its downward trend, remaining under pressure around the 1.1126 level and hitting an intra-day low of 1.1122.
The decline can be attributed to the weaker Euro currency as investors anticipate that the European Central Bank (ECB) will cut interest rates again in September.
However, the ECB began reducing interest rates in June, with the expectation that inflation in the Eurozone will return to the bank's target of 2% by 2025.
Meanwhile, the ECB decided to keep its key borrowing rates unchanged in July, concerned that aggressive rate cuts could reignite inflationary pressures. Furthermore, a mild recovery in the US Dollar has further pressured the EUR/USD currency pair.
Euro Weakens on Rate Cut Expectations and Economic Uncertainty
On the EUR front, the Euro is underperforming against its major peers as investors expect the European Central Bank (ECB) to cut interest rates again in September.
The ECB began lowering rates in June, aiming for inflation in the Eurozone to hit 2% by 2025. Despite this, the ECB kept rates unchanged in July due to concerns that further cuts might reignite inflation.
Recent data, including the Eurozone flash HCOB PMI for August and Q2 Negotiated Wage Rates, show an uncertain economic outlook and easing wage pressures.
This has led to expectations that the ECB will reduce rates by 25 basis points in September, with possible additional cuts in the last quarter of the year.
Investors are waiting for the flash Harmonized Index of Consumer Prices (HICP) data for Germany and the Eurozone, set to be released on Thursday and Friday, to get more clues on future rate cuts.
Therefore, the anticipated ECB rate cut and uncertain economic outlook contribute to a weaker Euro, likely exerting downward pressure on the EUR/USD pair. Traders' focus on upcoming HICP data could further influence the pair's movement.
US Dollar Rebounds Amid Rate Cut Speculations and Upcoming Inflation Data
On the US front, the major currency pair drops as the US Dollar (USD) recovers from a recent year-to-date low.
The US Dollar Index (DXY) has risen to around 100.80 from a low of 100.50. This rebound may be short-lived, with market participants viewing it as a potential selling opportunity.
The outlook for the USD remains uncertain, largely due to expectations that the Federal Reserve (Fed) will cut interest rates in September.
Traders are divided on whether the Fed will implement a 25 basis points (bps) or a larger 50 bps rate cut. According to the CME FedWatch tool, there is a 34.5% chance of a 50-bps cut, while the rest expect a 25-bps reduction.
Investors are awaiting the US core Personal Consumption Expenditure (PCE) inflation data for July, due on Friday. If inflation shows signs of declining, it could lead to a more aggressive rate cut by the Fed; otherwise, expectations for a large cut may fade.
EUR/USD - Technical Analysis
The Euro (EUR/USD) is currently trading at $1.11369, down 0.17% on the day, as the pair struggles to maintain momentum above key support levels.
On the 4-hour chart, the immediate support lies at $1.1150, which aligns closely with the 50-day Exponential Moving Average (EMA) at $1.1117.
A decisive break below this support could accelerate the pair’s decline, potentially leading to a test of the next support levels at $1.1107 and $1.1072.
These levels have previously acted as strong support and are critical in determining the short-term direction of the EUR/USD.
On the upside, the pivot point at $1.1201 serves as the immediate resistance. The pair would need to clear this level to challenge the next resistance at $1.1232, followed by $1.1266.
These resistance levels represent significant barriers that the Euro must overcome to reverse the current bearish sentiment. The RSI indicator is currently at 46, suggesting that there is room for further downside before reaching oversold conditions.
The overall technical outlook remains bearish, with the Euro struggling to gain traction above $1.1150.
The 50-day EMA will be a crucial level to watch, as a break below it could signal further losses. Conversely, a sustained move above the $1.1201 pivot point could provide the necessary momentum for a recovery.
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GBP/USD Price Analysis – Aug 28, 2024
GBP/USD Price Analysis – Aug 28, 2024
Daily Price Outlook
Despite expectations that the Bank of England (BoE) will cut interest rates more slowly than other central banks, the GBP/USD currency pair continued its losing streak, trading around 1.3218 and hitting an intra-day low of 1.3214.
This decline is largely due to the US Dollar recovering some ground, with investors focusing on the upcoming US core Personal Consumption Expenditure (PCE) Price Index data for July, scheduled for release on Friday.
Although the US Dollar has recently gained, its near-term outlook remains bearish as investors anticipate the Federal Reserve will reduce interest rates in its September meeting.
Conversely, the GBP/USD pair might trade sideways as investors await more clarity on the Bank of England’s future rate decisions.
The recent 25 basis points rate cut to 5% indicates a shift from a restrictive policy stance, reflecting confidence in achieving the 2% inflation target.
Impact of US Economic Data and Federal Reserve Expectations on GBP/USD
On the US front, the GBP/USD pair has fallen as the US Dollar regains strength. Investors are awaiting the core Personal Consumption Expenditure (PCE) data for July, due for release on Friday, which could have a notable impact on the pair.
The US Dollar Index (DXY) has attracted buying interest after reaching a new year-to-date low of 100.50.
Despite this recovery, the short-term outlook for the US Dollar remains uncertain as investors are anticipating a Federal Reserve rate cut in September, but opinions differ on the magnitude.
However, the CME FedWatch tool indicates a 34.5% chance of a 50-basis point cut, while most expect a 25-basis point reduction.
Economists forecast a slight increase in core PCE inflation to 2.7%, which could impact the Fed's decision and influence market speculation regarding future rate cuts.
Impact of BoE's Rate Decisions and Economic Outlook on GBP/USD
On the BoE front, the Pound Sterling is showing mixed performance against major currencies as investors await new information about interest rates.
The BoE recently cut rates by 25 basis points to 5%, ending a long period of high rates, and is confident it can bring inflation down to its 2% target.
The expectation is that the BoE will reduce rates more slowly than other central banks because the UK economy remains strong, supported by recent positive economic data.
Investors are looking for more guidance from BoE policymaker Catherine Mann’s upcoming speech at 12:15 GMT.
Mann had previously voted to keep rates steady at 5.25%, and her comments may provide insights into future rate cuts and inflation expectations.
Additionally, UK Prime Minister Keir Starmer’s remarks about a tighter fiscal budget, aiming for long-term benefits despite short-term tax increases, have bolstered the Pound’s appeal.
Therefore, the mixed performance of the GBP/USD pair reflects uncertainty as investors await further guidance on interest rates.
The BoE’s slower rate cuts and positive economic data may support the Pound, while upcoming comments from BoE policymaker Mann and fiscal budget details will also influence GBP/USD.
GBP/USD - Technical Analysis
The British Pound (GBP/USD) is currently trading at $1.32197, down 0.11% as the pair consolidates within a tight range on the 4-hour chart.
The pair is exhibiting some signs of resilience despite the modest pullback, with the price hovering near the immediate support level at $1.3149.
This level has proven to be a key short-term support and could be crucial in determining the next directional move.
On the upside, immediate resistance is seen at $1.3265, closely aligned with the pivot point at $1.3263. A break above this resistance could open the door for further gains towards the next resistance levels at $1.3299 and $1.3333.
These levels have acted as barriers in recent sessions, and overcoming them could signify a stronger bullish trend.
The Relative Strength Index (RSI) stands at 63, indicating that the market is still in a bullish phase but approaching overbought territory.
This suggests that while there is room for further upside, traders should be cautious of a potential pullback.
The 50-day Exponential Moving Average (EMA) at $1.3086 is currently providing strong support, reinforcing the overall uptrend.
Given the current setup, a buy limit order at $1.31920 could offer a favorable risk-reward ratio. The target would be the pivot point at $1.3263, with a stop loss at $1.31578 to protect against downside risks.
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GOLD Price Analysis – Aug 28, 2024
GOLD Price Analysis – Aug 27, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their downward trend, hovering near $2,507.77 after touching an intra-day low of $2,503.64.
This decline is partly due to renewed strength in the US Dollar (USD) on Tuesday. However, the US Dollar gained traction despite remarks from Federal Reserve Chair Jerome Powell at the Jackson Hole symposium hinting at potential interest rate cuts.
This dovish stance could cap gains in the US Dollar and provide support for the precious metal, as lower interest rates typically boost gold by decreasing the opportunity cost of holding non-yielding assets, potentially reversing its recent losses.
Meanwhile, the increasing escalating geopolitical tensions in the Middle East could further bolster gold, a traditional safe-haven asset.
On the flip side, the People's Bank of China (PBOC) halted gold purchases in July for the third consecutive month, potentially contributing to the dip in gold prices by diminishing overall market support.
Impact of US Economic Data and Fed Signals on Gold Prices
However, the broad-based US Dollar saw modest gains and remained bullish on Tuesday. Although, the comments from key Federal Reserve (Fed) officials suggest that interest rate cuts may be forthcoming, which could support gold prices.
Fed Chair Jerome Powell, speaking at Jackson Hole, hinted at potential policy adjustments and expressed confidence that inflation is nearing the Fed's 2% target.
San Francisco Fed President Mary Daly suggested that initiating rate cuts might be appropriate, while Richmond Fed President Thomas Barkin advocated for a "test and learn" approach. These mixed signals from the Fed could influence market dynamics and affect gold prices.
On the data front, the US economy demonstrated strength as Durable Goods Orders surged 9.9% in July, marking the highest increase since May 2020 and significantly surpassing the expected 4% rise.
Despite this robust economic data, the markets, as indicated by the CME FedWatch Tool, have fully priced in a 25 basis points rate cut, with a 30% probability of a larger cut, down from 36.5% the previous week.
Therefore, the US Dollar's modest gains and mixed Fed signals, along with strong Durable Goods Orders, may pressure gold prices. While potential rate cuts could support gold, robust economic data and a stronger Dollar could limit upward movement.
Geopolitical Tensions and Their Impact on Gold Prices
On the geopolitical front, US Air Force General C.Q. Brown reported that concerns about a larger conflict in the Middle East have lessened following a brief exchange of fire between Israel and Hezbollah.
However, he cautioned that Iran remains a significant threat, potentially considering a strike on Israel. In Egypt, ceasefire talks continue, but Hamas has rejected new Israeli conditions, sticking to a proposal from US President Joe Biden and the UN Security Council.
The easing of immediate conflict fears could stabilize gold prices, but ongoing tensions with Iran and Hamas might keep gold in demand as a safe-haven asset. Recent violence includes Israeli attacks on Gaza, particularly in Deir el-Balah and Khan Younis, resulting in at least 20 deaths.
Additionally, Israel is blocking fuel to Gaza's medical sector and has forced the UN to halt aid operations.
In the occupied West Bank, six Palestinians have been killed by Israeli soldiers and settlers, and far-right Israeli minister Itamar Ben-Gvir has made controversial statements about the Al-Aqsa Mosque compound.
Therefore, the reduction in immediate Middle East conflict fears could stabilize gold prices, but ongoing tensions, especially with Iran and Hamas, may sustain gold's appeal as a safe-haven asset. Continued violence and uncertainties in the region typically support higher gold prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,509.22, down 0.37% for the day, reflecting a bearish bias in the short term.
The key pivot point to watch is $2,515.43. If gold prices manage to hold above this level, we could see a potential rebound with immediate resistance at $2,531.64, followed by $2,545.87 and $2,559.32.
However, if the price fails to break above the pivot point, immediate support is seen at $2,494.37, with deeper levels at $2,479.52 and $2,463.26 offering additional safety nets for buyers.
The 50-day EMA, currently at $2,506.67, is acting as a short-term support level. If gold maintains its position above this moving average, it could provide a base for a bullish reversal.
The Relative Strength Index (RSI) is hovering at 47, suggesting that the market is neither overbought nor oversold, but leaning toward bearish territory.
This neutral-to-bearish momentum indicates that the market could swing either way depending on upcoming market catalysts.
The overall technical picture suggests caution. A clear break above $2,515.43 would trigger buying interest, with a potential move towards $2,526 as the first target.
Conversely, if gold dips below $2,494, it could open the door for further downside, possibly toward the $2,479 level.
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USD/CAD Price Analysis – Aug 27, 2024
AUD/USD Price Analysis – Aug 27, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained a bullish stance and remained well bid around the 0.6782 level, reaching an intra-day high of 0.6792.
This upward momentum was supported by upbeat market sentiment, which bolstered riskier assets like the Australian dollar (AUD).
However, the market sentiment gained traction as the Federal Reserve (Fed) is expected to start cutting interest rates in September.
This optimism is reflected in the S&P 500 futures, which have shown solid gains during European trading hours.
On the other side, the upticks in the currency pair could be short-lived as investors await the release of Australia’s Consumer Price Index (CPI) data for July on Wednesday. However, the annual inflation rate is expected to slow to 3.4% from the previous 3.8%.
Thus, the drop in inflation could lead to speculation that the Reserve Bank of Australia (RBA) may not cut interest rates this year.
Expected CPI Slowdown Could Boost AUD/USD as RBA Rate Cuts Seem Unlikely
On the AUD front, the Australian dollar's rally has slowed as investors turn their attention to the upcoming Consumer Price Index (CPI) data for July, which is due out on Wednesday.
The focus is on how this data might influence the Reserve Bank of Australia's (RBA) future decisions.
On the data front, inflation is expected to have slowed to 3.4% annually, down from 3.8% previously.
If inflation does indeed decrease, it could lead to speculation that the RBA will hold off on cutting interest rates this year, which might support the Australian dollar.
The market is closely watching to see how this data will shape the RBA's next moves and impact the AUD's performance.
Therefore, the expected slowdown in inflation may support the AUD/USD pair by reducing the likelihood of RBA rate cuts. If the RBA maintains rates, the Australian dollar could strengthen, potentially driving the AUD/USD pair higher.
Impact of Fed's Mixed Signals and Strong US Data on AUD/USD Dynamics
Despite the bullish US Dollar, the AUD/USD pair is gaining momentum amid positive risk sentiment. However, the recent comments from Federal Reserve officials hint at possible upcoming interest rate cuts, which could lend support to the Australian dollar.
Fed Chair Jerome Powell has indicated potential policy adjustments, expressing confidence that inflation is nearing the Fed's 2% target.
Meanwhile, San Francisco Fed President Mary Daly suggested that the time might be right to consider rate cuts, and Richmond Fed President Thomas Barkin advocated for a "test and learn" approach. These mixed signals from the Fed could influence market dynamics and impact the USD.
On the data front, the US economy demonstrated strength as Durable Goods Orders surged 9.9% in July, the highest increase since May 2020 and significantly surpassing expectations.
Despite this robust economic data, markets have fully priced in a 25 basis points rate cut, with a 30% probability of a larger cut, down from 36.5% the previous week.
Therefore, the mixed signals from the Fed, coupled with strong US economic data, may support the AUD/USD pair.
Interest rate cut speculation could bolster the Australian dollar, while robust US data might limit USD gains, influencing AUD/USD dynamics.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.67752, up 0.18% on the day, signaling a modest bullish trend.
The pivot point to watch is $0.6761. If prices stay above this level, the pair could continue its upward momentum, with immediate resistance at $0.6796, followed by $0.6816 and $0.6837.
A break above these levels could further solidify the bullish trend, with the potential to test higher levels in the short term.
On the downside, immediate support is found at $0.6740, with additional support levels at $0.6717 and $0.6696, providing a cushion for any pullbacks.
The 50-day Exponential Moving Average (EMA), currently at $0.6752, is serving as a crucial support level. As long as the AUD/USD remains above this EMA, the outlook remains positive, with the trend likely to stay bullish.
The Relative Strength Index (RSI) is at 55, indicating that the market is leaning towards bullish territory but isn't overbought, leaving room for further upside.
In summary, the technical indicators suggest that buying interest will likely strengthen if the pair remains above the pivot point at $0.6761.
Traders should consider entering long positions above $0.67614, targeting $0.67957, with a stop loss set at $0.67432 to manage risk. However, a drop below $0.6740 could signal a potential shift towards a bearish trend.
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USD/CAD Price Analysis – Aug 27, 2024
USD/CAD Price Analysis – Aug 27, 2024
Daily Price Outlook
During the early European hours on Tuesday, the USD/CAD currency pair failed to halt its downward trend and remained under pressure around 1.3466, hitting an intra-day low of 1.3463.
This decline in the USD/CAD pair could be attributed to the improving commodity-linked Canadian Dollar (CAD) amid rising crude oil prices.
On the other hand, the US Dollar initially saw modest gains but later turned bearish, possibly due to comments from key Federal Reserve (Fed) officials suggesting that interest rate cuts may be forthcoming.
Fed Chair Jerome Powell, speaking at Jackson Hole, hinted at potential policy adjustments and expressed confidence that inflation is nearing the Fed's 2% target.
Impact of Rising Oil Prices and US Interest Rate Expectations on USD/CAD
As we mentioned above, crude oil prices have surged due to concerns about potential supply disruptions. These fears are driven by the escalating conflict in the Middle East and the possible shutdown of Libyan oil fields.
Meanwhile, tensions remain high as Hamas rejected Israel's new conditions in ceasefire talks, insisting that Israel follow the terms set by US President Joe Biden and the UN Security Council.
Despite these worries, US Air Force General C.Q. Brown noted that fears of a broader conflict in the region have eased, with recent clashes between Israel and Hezbollah not escalating further.
Moreover, oil prices also gained support from growing expectations of US interest rate cuts. Such cuts could boost fuel demand by stimulating economic activity in the United States, the world's largest oil consumer.
Lower borrowing costs are likely to drive economic growth, increasing the need for oil and keeping prices elevated.
This news is likely to strengthen the Canadian Dollar (CAD) against the US Dollar (USD), pushing the USD/CAD pair lower. Rising oil prices benefit the CAD, while expectations of US interest rate cuts weaken the USD.
Potential US Interest Rate Cuts Weaken USD/CAD Pair
On the US front, the broad-based US Dollar failed to sustain its upward trend and turned bearish amid comments from Federal Reserve Chairman Jerome Powell.
Speaking at the Jackson Hole Symposium on Friday, Powell mentioned that "the time has come for policy to adjust," signaling a potential shift in interest rates. However, he did not provide specifics on when rate cuts would start or how large they might be.
In response, market expectations for a rate cut have grown. The CME FedWatch Tool shows that traders now fully anticipate at least a 25 basis point reduction by the Federal Reserve at its September meeting.
This indicates that investors believe the Fed will soon take action to support the economy, leading to a weaker US Dollar.
Therefore, this news is likely to weaken the US Dollar against the Canadian Dollar (CAD), leading to a decline in the USD/CAD pair.
The anticipation of US interest rate cuts reduces USD strength, while higher oil prices support the CAD.
USD/CAD - Technical Analysis
USD/CAD is currently trading at $1.34774, down 0.04% for the day, reflecting a mild bearish trend.
The pivot point to watch is $1.3516. If the pair continues to trade below this level, we could see further downside pressure, with immediate support at $1.3424.
Should this support break, the next levels to watch are $1.3360 and $1.3287, where additional buying interest may emerge.
The 50-day Exponential Moving Average (EMA) is sitting at $1.3612, which is above the current price and acts as a resistance level, reinforcing the bearish sentiment.
The Relative Strength Index (RSI) is at 23, indicating that the pair is in oversold territory. While this suggests that a rebound could be possible, the overall trend remains bearish as long as the price stays below the pivot point of $1.3516.
In conclusion, traders might consider selling below $1.35164, targeting a take profit around $1.34225, with a stop loss at $1.35731 to manage risk.
The immediate resistance levels to watch on the upside are $1.3574, $1.3633, and $1.3685. However, the bearish bias dominates unless the price breaks above these resistance levels.
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AUD/USD Price Analysis – Aug 27, 2024
GBP/USD Price Analysis – Aug 26, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend and remained well bid around the 1.3225 level.
This bullish momentum is primarily driven by dovish comments from Federal Reserve (Fed) Chair Jerome Powell regarding interest rates. These remarks undermine the US dollar and contribute to the GBP/USD pair’s gains.
Powell's comments at the Jackson Hole Symposium suggest that the Fed is considering rate cuts, reflecting concerns over the US labor market's downside risks.
Fed Rate Cut Expectations and Economic Data Impact on GBP/USD
Jerome Powell, the Fed Chair, hinted that the central bank might cut interest rates to support the labor market and keep inflation around 2%.
However, he didn’t specify when these cuts might occur, stating that the decision will depend on future economic data.
This lack of clear guidance has weakened the US dollar. As a result, the Pound Sterling (GBP) has strengthened against the US Dollar (USD), pushing the GBP/USD exchange rate higher.
In simple terms, the uncertainty about the Fed’s next moves has made the USD less valuable, benefiting the GBP.
On the US front, the US Dollar Index (DXY), which measures the USD against six major currencies, recently hit a new year-to-date low of 100.53.
Investors are awaiting crucial economic data this week, including the July core Personal Consumption Expenditure (PCE) Price Index and Durable Goods Orders.
These releases will be pivotal in shaping expectations for Fed policy and, consequently, influencing the GBP/USD movement.
Bank of England’s Cautious Approach Bolsters Pound Amid Rate Cut Speculation
On the BoE front, the Pound Sterling is performing well against its major peers at the start of the week.
The British currency is gaining strength because the Bank of England (BoE) is cautious about planning rate cuts too soon, given that inflation in the UK is still a concern.
BoE Governor Andrew Bailey indicated at the Jackson Hole Symposium that while inflation pressures may be less severe than expected, the BoE should not rush to cut interest rates. He emphasized the need to be careful not to lower rates too quickly or too much.
This week, market speculation about future BoE rate cuts will guide the Pound Sterling, as there is no major economic data expected from the UK.
Currently, traders anticipate one more rate cut from the BoE this year. Although the BoE did cut rates on August 1, recent positive economic data, like the stronger-than-expected flash S&P Global/CIPS PMI for August, has lessened the likelihood of another rate cut in September.
GBP/USD - Technical Analysis
The British Pound (GBP) is currently trading at $1.31995 against the US Dollar (USD), reflecting a slight decline of 0.14% in today’s session.
On the 4-hour chart, GBP/USD is flirting with the critical pivot point at $1.3220, which has been a key level of interest for traders.
The currency pair’s recent price action suggests that the market is at a crossroads, with potential for both upward and downward movement depending on how it interacts with this pivot.
The Relative Strength Index (RSI) is hovering around 73, indicating that the pair is nearing overbought territory.
This elevated RSI suggests that the upward momentum may be losing steam, making it increasingly likely that we could see a pullback.
However, as long as GBP/USD stays above the 50-day Exponential Moving Average (EMA), currently positioned at $1.3092, the broader uptrend remains intact.
Resistance levels to watch include $1.3255 as the immediate barrier, followed by $1.3299 and $1.3340. A break above these levels could reinvigorate the bullish trend, pushing the pair toward new highs.
On the downside, immediate support is found at $1.3165, with further support at $1.3121 and $1.3078.
A breach of $1.3165 could trigger a more pronounced sell-off, potentially bringing the pair back down to test the lower support levels.
Conclusion: The market remains cautiously optimistic but is showing signs of overextension.
Traders might consider selling below the $1.3220 pivot point, aiming for a take profit around $1.3165 and setting a stop loss near $1.3255. Keep an eye on the RSI and the 50 EMA for any shifts in momentum.
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GOLD Price Analysis – Aug 26, 2024
EUR/USD Price Analysis – Aug 26, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair failed to maintain its upward trend and turned bearish around the 1.1166 level, hitting an intra-day low of 1.1163.
The downward trend can be attributed to growing speculation that the European Central Bank (ECB) will reduce interest rates again in the September meeting. The ECB is also expected to deliver one more interest rate cut in the last quarter of this year.
This undermined the shared currency and contributed to the EUR/USD pair's losses. On the other hand, the bearish US dollar, driven by the dovish Fed, was seen as a key factor that limited any additional losses in the EUR/USD pair.
ECB Rate Cut Speculation and Economic Uncertainty Weigh on EUR/USD
On the EUR front, market expectations for ECB interest rate cuts in September have increased due to rising uncertainty over the Eurozone's economic outlook and slowing wage growth.
Although economic activity in the Eurozone showed unexpected growth in August, according to the flash HCOB PMI report, this was mainly driven by strong demand in France related to the upcoming Olympics in Paris.
Economists consider this as a temporary boost rather than a sign of long-term improvement.
Adding to the uncertainty, ECB Chief Economist Philip Lane emphasized the need for restrictive monetary policy at the Jackson Hole Symposium, acknowledging some progress in inflation control but warning that success is not guaranteed.
Investors are now closely watching the preliminary German and Eurozone Harmonized Index of Consumer Prices (HICP) data for August, set to be released on Thursday and Friday.
These figures will offer more insight into future interest rate decisions, with Eurozone annual headline and core HICP expected to have slowed to 2.3% and 2.8%, respectively.
Meanwhile, the IFO Institute's report on Monday showed that the German Business Climate, Current Assessment, and Expectations for August exceeded expectations but were still lower than July’s figures. This data did not provide any significant boost to the EUR/USD pair.
Therefore, the news heightened concerns over the Eurozone's economic outlook and potential ECB rate cuts, leading to a bearish impact on the EUR/USD pair. Despite some positive data, the uncertainty limited any significant upward movement for the euro.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.11828, reflecting a slight dip of 0.09% on the day. As we analyze the 4-hour chart, it becomes clear that the currency pair is hovering near a crucial pivot point at $1.1201.
This level is proving to be a significant battleground for bulls and bears alike, with immediate resistance sitting just above at $1.1232.
The EUR/USD has been on an upward trajectory in recent sessions, but the momentum is showing signs of fatigue as it nears overbought conditions.
The Relative Strength Index (RSI) is currently at 69, suggesting that the pair is approaching overbought territory. While the RSI hasn’t yet crossed the 70 mark, it's close enough to warrant caution.
Traders may want to consider this as a signal that the upward momentum could be losing steam. Meanwhile, the 50-day Exponential Moving Average (EMA), currently positioned at $1.1077, is still well below the current price, reinforcing the general uptrend that we’ve seen over the past few weeks.
Should the price break above the immediate resistance at $1.1232, the next hurdles to watch are $1.1266 and $1.1299.
A clear break above these levels could set the stage for further gains. On the downside, immediate support is located at $1.1150, with additional support levels at $1.1107 and $1.1072.
If EUR/USD slips below $1.1150, we might see a more pronounced correction, bringing the pair closer to the 50 EMA at $1.1077.
Conclusion: The EUR/USD outlook remains cautiously optimistic as long as the pair stays above the $1.1150 support level.
However, traders should be mindful of the near-overbought RSI. Consider selling below $1.1201 with a target of $1.1150, and set a stop loss at $1.1232 to manage risk.
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GOLD Price Analysis – Aug 26, 2024
GOLD Price Analysis – Aug 26, 2024
Daily Price Outlook
Gold price (XAU/USD) managed to stop its early mild losses and regained some positive traction the $2,524.60 and approaching its all-time highs of $2,526.
However, the surge in gold prices can be attributed to a combination of factors, including rising geopolitical tensions in the Middle East and expectations of a lower interest rate regime from the Federal Reserve (Fed).
The precious metal is benefiting from increased safe-haven demand amid ongoing conflicts and a more dovish Fed outlook.
Fed Chair Powell's Speech and Its Impact on Gold Prices
Gold's recent gains were significantly influenced by Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium.
Powell’s comments on the potential for future interest rate cuts have bolstered gold prices. He highlighted the cooling labor market and indicated that the Fed might reduce rates, suggesting that a lower interest-rate regime is on the horizon.
This shift in policy expectations has increased investor interest in gold, which benefits from lower yields on government bonds. Following Powell’s speech, US government bond yields fell, reducing the opportunity cost of holding non-interest bearing gold.
Market expectations for a substantial rate cut in September have surged, with the likelihood of a 0.50% reduction climbing to the mid-30% range, up from the mid-20% prior to the speech. The US Dollar Index (DXY) also fell to a new year-to-date low of 100.53, further supporting gold’s appeal as a safe haven.
Geopolitical Tensions Fuel Gold's Bullish Momentum
On the other side, the geopolitical developments have also played a crucial role in gold's price movement. Rising tensions in the Middle East, particularly the conflict between Israel and Hezbollah, have heightened demand for safe-haven assets like gold.
Over the weekend, Israel launched a significant pre-emptive strike on Hezbollah positions in Lebanon, prompting a retaliatory missile and drone attack by Hezbollah in northern Israel.
The risk of further escalation involving Iran has also contributed to increased market uncertainty and demand for gold.
This geopolitical risk has provided additional support to gold prices, as investors seek refuge in assets that are perceived as safe during times of heightened geopolitical uncertainty.
The combination of these factors—expected rate cuts by the Fed and escalating geopolitical risks—has fueled gold’s bullish momentum, with prices nearing record levels.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,510.35, reflecting a modest dip of 0.12% in today’s session. The precious metal has been struggling to gain upward momentum, and the price action suggests a cautious market.
On the 4-hour chart, Gold is hovering near the key pivot point at $2,515.43. This level is crucial as it has repeatedly acted as a barrier, preventing the price from making a decisive move either up or down.
The RSI is currently at 56, indicating a balanced market sentiment. While this isn’t an overbought level, it’s also not showing strong buying pressure, which aligns with the current price consolidation.
The 50-day EMA at $2,491.19 is providing solid support, and as long as Gold holds above this EMA, the broader trend remains intact. However, the lack of momentum suggests that any upward movement could be capped unless we see a strong push past the immediate resistance.
Speaking of resistance, the first hurdle lies at $2,531.64, followed by $2,545.87 and $2,559.32. A break above these levels could see Gold testing new highs.
On the downside, immediate support is at $2,494.37, with further levels at $2,479.52 and $2,463.26. A break below $2,494.37 could trigger a sell-off, targeting the next support zones.
Conclusion: The market sentiment remains cautious. Gold’s price action suggests a potential for further downside unless it can break above $2,515.43.
Traders might consider selling below $2,515 with a target of $2,490, setting a stop-loss at $2,531 to manage risk.
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EUR/USD Price Analysis – Aug 26, 2024
GOLD Price Analysis – Aug 23, 2024
Daily Price Outlook
Gold prices (XAU/USD) extended their upward rally, gaining traction around the $2,498.40 level and reaching an intra-day high of $2,501.85. This rebound is primarily fueled by a bearish US dollar, which lost its traction on the back of dovish expectations from the Federal Reserve. The overall outlook for gold remains positive ahead of a key event: Federal Reserve Chairman Jerome Powell's speech at the central banker symposium in Jackson Hole. Powell is anticipated to affirm market expectations of a rate cut at the Fed’s September 18 meeting. Additionally, persistent geopolitical tensions continue to lend support to gold prices.
Impact of Weakening US Dollar and Fed Rate Cut Expectations on Gold Prices
On the US front, the broad-based US Dollar (USD) is losing momentum as expectations grow that the Federal Reserve (Fed) may begin lowering interest rates at its September policy meeting. Although the USD had briefly rebounded from its year-to-date low, thanks to a rise in US Treasury bond yields, this recovery has been weak. Investors are increasingly betting on an imminent start to the Fed's rate-cutting cycle, which has helped limit losses for gold (XAU/USD).
On the data side, the US Department of Labor reported that Initial Jobless Claims rose to 232,000 in the week ending August 17, slightly above the previous 228,000. A review also showed that US employers added 818,000 fewer jobs than initially reported for the year through March.
Additionally, minutes from the July Federal Open Market Committee (FOMC) meeting revealed growing support among policymakers for a rate cut next month as inflation shows signs of easing. Meanwhile, the S&P Global flash PMI pointed to a sharp contraction in the manufacturing sector, while the services sector saw unexpected growth. Some Fed officials remain cautious, expressing the need for more data before fully endorsing a rate cut.
Therefore, these developments positively impact gold prices by weakening the US dollar and increasing expectations of Federal Reserve rate cuts. Economic uncertainties highlighted by recent data boost gold's appeal as a safe-haven asset, supporting and potentially elevating its value.
GOLD (XAU/USD) - Technical Analysis
Gold is currently demonstrating strength, trading at $2,492.85, up 0.33% for the day. The key pivot point at $2,503.37 will be crucial in determining gold's next move. Immediate resistance lies at $2,520.98, with further resistance levels at $2,540.75.
On the downside, support is found at $2,475.81, with additional levels at $2,450.95 and $2,432.88. The Relative Strength Index (RSI) is at 48, indicating neutral momentum, while the 50-day Exponential Moving Average (EMA) at $2,485.74 provides underlying support.
If gold manages to break above the $2,503.37 pivot point, it could sustain its upward trend, potentially reaching the $2,520.98 resistance level. However, if the price falls below the $2,475.81 support level, it could signal a deeper correction.
Conclusion: Consider buying above $2,480, with a target of $2,505 and a stop loss at $2,462. This strategy offers a balanced risk-to-reward ratio, especially if gold maintains its upward momentum.
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