S&P500 (SPX) Price Analysis – July 12, 2024
Daily Price Outlook
During the European trading session, the S&P 500 index failed to extend its previous upward trend and turned bearish around the 3,584 level, reaching an intraday low of 3,576. The downturn was driven by escalating political tensions in the US and internationally.
Additionally, softer-than-expected US consumer inflation figures raised expectations that the Federal Reserve might cut interest rates in September. Initially, sectors that typically benefit from lower rates saw gains, but technology stocks within the S&P 500 index faced declines as well.
Looking ahead, traders are currently attentive to the upcoming releases of the US Producer Price Index (PPI) and the University of Michigan Consumer Sentiment survey during the North American session.
These data points are anticipated to provide significant market cues, influencing investor sentiment and potentially impacting market movements.
Impact of US Economic Data and Federal Reserve Expectations on the S&P 500
On the US front, the broad-based US dollar rebounded from a nearly three-month low despite expectations of a September rate cut by the Federal Reserve, driven by softer inflation figures.
This recovery was bolstered by a rise in US Treasury bond yields and encouraging Initial Jobless Claims, which declined to 222,000 for the week ending July 6. According to the CME Group's FedWatch Tool, investors now perceive a 90% likelihood of a rate cut in September.
Furthermore, Federal Reserve officials indicated that improved inflation metrics could warrant one or two rate reductions this year, though they remain cautious regarding recession risks.
In economic data, the US Consumer Price Index (CPI) recorded its first decline in June in over four years, with the annual rate easing to 3% from May's 3.3%.
Core CPI, excluding volatile food and energy prices, increased by 0.1% for the month and by 3.3% year-over-year, falling short of expectations. As a result, investors now perceive a greater than 90% probability of a rate cut in the near term.
Therefore, the S&P 500 initially responded favorably to expectations of a September rate cut driven by softer inflation data, benefiting sectors sensitive to lower rates. However, gains were limited by the strength of the US dollar, which tempered overall market gains.
Impact of Political and Geopolitical Factors on the S&P 500
On the other hand, the increasing political uncertainty in the US and Europe is adding pressure to global markets sentiment. Simultaneously, escalating geopolitical tensions are negatively impacting market sentiment, raising concerns about energy prices and trade disruptions.
These factors, combined with worries over a global economic slowdown amid inflationary pressures, have contributed to the current bearish trend in the S&P 500. Investors are closely monitoring central bank responses and geopolitical developments, which could further influence market sentiment and the index's performance in the months ahead.
S&P 500 - Technical Analysis
The S&P 500 has edged lower, closing at 5584.55, a 0.88% decline for the day. This pullback has brought the index to a critical juncture, testing the immediate support level of $5562.89. If this support holds, it could signal a potential rebound, with the 50-day Exponential Moving Average (EMA) at $5519.53 acting as a further cushion.
However, a breach of this support could open the door for a deeper correction, potentially targeting the $5539.43 and $5521.00 support levels.
The Relative Strength Index (RSI), currently at 58, indicates that the market is neither overbought nor oversold.
This suggests that the recent decline may be a temporary consolidation rather than a full-fledged reversal. However, a further drop below 50 would raise concerns about the sustainability of the current uptrend.
Investors should closely monitor the price action around the $5562.89 support level. A decisive bounce could present a buying opportunity, targeting the $5615.00 pivot point.
However, a break below this level would likely trigger further selling pressure, warranting caution and potentially prompting a reassessment of the bullish outlook.
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GOLD Price Analysis – July 12, 2024
Daily Price Outlook
Despite the release of softer-than-expected US consumer inflation figures, which boosted bets for a September interest rate cut by the Federal Reserve, Gold (XAU/USD) has failed to extend its three-day winning streak.
It edged lower around the 2,401 level, hitting an intra-day low of 2,400. This downward movement can be attributed to the uptick in US bond yields and renewed US dollar demand.
Additionally, the bullish sentiment surrounding the equity markets prompted some selling of the safe-haven precious metal during the European session on Friday.
Looking ahead, traders are now focused on the upcoming release of the US Producer Price Index (PPI) and the University of Michigan Consumer Sentiment survey for potential market-moving cues later in the North American session.
US Dollar Rebounds Despite Rate Cut Expectations, Bolstering Gold Prices
On the US front, the broad-based US dollar edged higher from a nearly three-month low despite expectations of a September rate cut by the Federal Reserve, driven by softer inflation figures.
This rebound was supported by a rise in US Treasury bond yields and better-than-expected Initial Jobless Claims, which fell to 222K for the week ending July 6. Investors now see a 90% chance of a rate cut in September, as per the CME Group's FedWatch Tool.
Additionally, Fed officials noted that improving inflation figures could justify one or two rate cuts this year, though they remain cautious about recession risks.
On the data front, the US Consumer Price Index (CPI) dipped in June for the first time in over four years, with the yearly rate slowing to 3% from 3.3% in May. Core CPI rose 0.1% for the month and 3.3% YoY, missing estimates. Investors now see over a 90% chance of a rate cut.
Therefore, the expectation of a Federal Reserve rate cut in September, driven by softer inflation data, has bolstered gold prices as lower interest rates typically increase the appeal of non-yielding assets like gold.
GOLD (XAU/USD) - Technical Analysis
Gold's recent rally has lost steam, with prices dipping slightly to $2409.45 per ounce. The precious metal now finds itself at a crucial juncture, testing the pivotal $2413.74 support level.
A decisive break below this level could trigger further downside momentum, potentially pushing prices towards the $2397.20 support zone. Conversely, a rebound from this level could signal renewed buying interest, with the potential to retest recent highs.
The 50-day Exponential Moving Average (EMA), currently at $2377.62, is a key indicator to watch. This moving average has served as a reliable support level in recent months, and a break below it would likely amplify bearish sentiment.
However, as long as prices remain above this EMA, the medium-term outlook remains cautiously optimistic.
The Relative Strength Index (RSI), a momentum indicator, currently sits at 68. While this suggests the market is overbought, it's important to note that gold has maintained elevated RSI levels during its recent uptrend.
Therefore, traders should exercise caution and wait for confirmation before acting on this signal.
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AUD/USD Price Analysis – July 11, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, staying strong around the 0.6759 level and peaking at an intraday high of 0.6764. This upward movement can be attributed to several factors.
Firstly, there is increasing speculation that the Reserve Bank of Australia (RBA) may postpone joining the global trend of interest rate cuts or even consider raising rates, which has bolstered demand for the Australian dollar and supported gains in AUD/USD.
Secondly, weakness in the US dollar also contributed as market expectations lean towards the Federal Reserve initiating interest rate cuts starting in September, undermining the greenback's strength.
Looking ahead, traders are exercising caution in taking significant positions as they await the release of the latest consumer inflation figures from the United States (US).
The upcoming US CPI report is expected to be closely monitored for insights into the Federal Reserve's approach to potential rate cuts, which could influence demand for the US dollar and significantly impact commodity markets.
Impact of Economic Data and Speculation on AUD/USD Pair
Despite soft Consumer Inflation Expectations reported by the Melbourne Institute for July, reflecting subdued consumer outlook on inflation over the next year, the AUD/USD pair has displayed upward movement.
This rise can be attributed to increasing speculation that the Reserve Bank of Australia (RBA) may delay joining the global trend of interest rate cuts or possibly even consider raising rates again.
Recent data indicates a decline in Australian consumer confidence for July, contrasting with a surge in business sentiment to a 17-month high in June, highlighting divergent economic outlooks.
On the data front, Australia's Consumer Inflation Expectations for July eased slightly to 4.3% from the previous 4.4%. Meanwhile, China, a key trade partner, reported a 0.2% annual increase in its Consumer Price Index (CPI) for June, down from 0.3% in May and below market expectations of 0.4%.
On a monthly basis, Chinese CPI declined by 0.2% in June, contrasting with a 0.1% decrease in May and missing the anticipated 0.1% drop.
Additionally, Australia's Westpac Consumer Confidence fell by 1.1% in July following a 1.7% increase in June, marking the fifth decline this year amid concerns over elevated inflation, interest rates, and economic growth.
Therefore, the AUD/USD pair exhibited upward movement, driven by speculation that the RBA may postpone rate cuts or even consider raising rates. The contrasting economic outlooks, with lower consumer confidence but higher business sentiment, also played a role in shaping its trajectory.
Impact of Fed Expectations and CPI Data on AUD/USD Pair
On the US front, the broad-based US dollar continues to weaken and remains bearish amid mounting expectations that the Federal Reserve will commence interest rate cuts starting in September, potentially followed by additional cuts in December.
Fed Chair Jerome Powell's recent remarks have underscored this sentiment, highlighting the Fed's commitment to maintaining price stability and contemplating a move towards neutral interest rates by late 2024 as inflation trends evolve. Despite acknowledging signs of economic moderation,
On the data front, the headline Consumer Price Index (CPI) is anticipated to have risen by 0.1% in June, marking a slight easing in the annual rate from 3.3% to 3.1%. Meanwhile, Core CPI, which excludes Food and Energy prices, is expected to maintain a steady year-over-year rate of 3.4%.
Therefore, the AUD/USD pair could find support as the US dollar weakens due to expectations of Federal Reserve rate cuts, bolstered by Chair Powell's comments on stable inflation and possible interest rate adjustments. Economic data indicating moderated CPI rates in the US could further impact market sentiment.
AUD/USD - Technical Analysis
The Australian dollar is showing signs of strength against the U.S. dollar, trading up 0.16% at $0.6758. A closer look at the 4-hour chart reveals a bullish bias, with the Aussie perched just above a pivot point of $0.6752.
This level now serves as a crucial support zone, with a break below potentially triggering a move towards the next support levels at $0.6732, $0.6712, and $0.6697.
Conversely, the bulls have their eyes on the immediate resistance at $0.6767. A decisive move above this level could open the door for a rally towards the next resistance targets at $0.6787 and $0.6804.
The 50-day Exponential Moving Average (EMA), currently at $0.6742, is also acting as dynamic support, further reinforcing the bullish outlook.
The Relative Strength Index (RSI) is currently at 64, suggesting some room for further upside before entering overbought territory. However, traders should remain vigilant for any signs of exhaustion or reversal in momentum.
Given the current technical setup, traders could consider initiating long positions above $0.67518, with a stop-loss order placed below $0.67321. The initial target for profit-taking would be the resistance level at $0.67870.
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GOLD Price Analysis – July 11, 2024
Daily Price Outlook
China's Pause in Gold Purchases and Its Impact on Global Market Trends and Prices
China's central bank, the People’s Bank of China (PBOC), has halted its gold purchases for the second consecutive month, maintaining its reserves at 72.8 million troy ounces.
This marks a departure from its previous 18-month streak of continuous gold acquisitions since November 2022, during which China's consistent buying had driven gold prices to record highs.
However, the PBOC's decision signals a temporary pause in its strategy to bolster gold reserves, which had been a significant factor in the sustained upward trajectory of gold prices.
This development is likely to ease some of the upward pressure on global gold markets that had resulted from China's persistent purchasing activity over the past year and a half.
Impact of China's Pause in Gold Purchases on Global Markets and Prices
However, the reason behind this pause could be linked to the People’s Bank of China (PBOC) adjusting its strategy in response to fluctuating global gold prices and domestic economic conditions. Global gold prices have shown volatility, prompting the PBOC to reassess its buying patterns.
Furthermore, domestic factors such as inflation and economic growth rates may have influenced the decision. By halting gold accumulation, the PBOC might aim to stabilize its reserves at current levels or await more favourable market conditions before resuming purchases, impacting global gold markets and prices accordingly.
Therefore, the PBOC's pause in gold purchases could alleviate some of the upward pressure on global gold prices by reducing demand from one of the largest buyers.
This may lead to stabilization or even a slight correction in prices, depending on market reactions to China's altered buying behavior and broader economic factors influencing gold markets.
China's Quiet Gold Buying Continues Despite Official Pause; Federal Reserve Policy Shifts Market Focus
Despite the official pause in its public gold purchases, some experts believe they might still be acquiring it quietly, especially since prices are currently high.
Christopher Vecchio, who heads Futures & Forex at Tastylive, mentioned in an interview with Kitco News that regional data suggests ongoing Chinese gold purchases through late June.
He pointed out that while central bank purchases used to strongly affect gold prices, their influence has lessened recently. Now, attention has shifted more towards the Federal Reserve's decisions on interest rates, which are seen as having a bigger impact on where gold prices go next.
GOLD (XAU/USD) - Technical Analysis
Gold prices are poised at a critical juncture, currently trading at $2382. The 4-hour chart reveals a complex interplay of support and resistance levels.
The immediate resistance stands at $2391.22, a level that gold bulls need to overcome to confirm a sustained upward move. A break above this resistance could propel prices towards the next targets at $2402.89 and $2412.31.
Conversely, the immediate support lies at $2370.65. A breach below this level could trigger a deeper retracement towards $2358.72 and $2349.50. The 50-day Exponential Moving Average (EMA), currently at $2371.18, acts as a dynamic support level that could bolster prices on any dips.
The Relative Strength Index (RSI) reading of 64 suggests that gold is in overbought territory, raising the possibility of a short-term pullback. However, the overall trend remains bullish, with the potential for further upside if buyers maintain momentum.
Given the current technical setup, a conservative approach would be to wait for a confirmed break above $2391.22 before initiating long positions.
Alternatively, aggressive traders could consider buying above $2379, with a stop-loss order placed below $2370. The initial target for profit-taking would be the pivot point at $2396.75.
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- USD/JPY Price Analysis – July 11, 2024
USD/JPY Price Analysis – July 11, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has been experiencing a bearish trend, extending its losses for the third consecutive day. This decline is primarily driven by traders' cautious stance ahead of the upcoming release of the US Consumer Price Index (CPI) data for June, scheduled for Thursday.
The CPI data is crucial as it will provide more clarity on the Federal Reserve's future monetary policy direction. Additionally, recent remarks by Fed Chair Jerome Powell, emphasizing the need to monitor the deteriorating labor market, have contributed to the uncertainty and downward pressure on the USD/JPY pair.
Another factor supporting the Japanese Yen (JPY) and contributing to the weakness of the USD/JPY pair is the rising speculation that the Bank of Japan (BoJ) may raise interest rates in its upcoming July meeting.
This speculation has bolstered the JPY, limiting its downside and adding to the bearish sentiment surrounding the USD/JPY pair.
Stability of the Japanese Government's 10-Year JGB Yield and Its Impact on USD/JPY Pair
On the JPY pair, the Japanese government's 10-year Japanese Government Bond (JGB) yield has remained stable at approximately 1.09%, close to its recent high of 1.10% recorded on July 3.
This stability has come amidst selling pressure on Japanese government bonds, reflecting overseas investors' anticipation that the BoJ may raise interest rates in response to the weakening Japanese Yen. The stability in JGB yields supports the JPY, contributing to the downward trend of the USD/JPY pair.
Furthermore, the BoJ is reportedly considering trimming this year's economic growth forecast and projecting that inflation will stay around its 2% target in the coming years.
This consideration, coupled with the BoJ's ongoing in-person meetings with banks and financial institutions to assess a feasible pace for scaling back its JGB purchases, has further influenced the market's expectations and supported the JPY.
Impact of Anticipated Fed Rate Cuts and Easing CPI Data on USD/JPY Pair
On the US front, the overall strength of the US dollar continues to decline, reflecting growing expectations that the Federal Reserve will begin cutting interest rates starting in September, possibly followed by more cuts in December.
Recent statements from Fed Chair Jerome Powell have reinforced this outlook, emphasizing the Fed's goal of keeping prices stable and considering a shift to neutral interest rates by late 2024 as inflation trends develop. Despite noting signs of economic slowdown,
On the data front, the headline Consumer Price Index (CPI) is anticipated to have risen by 0.1% in June, marking a slight easing in the annual rate from 3.3% to 3.1%. Meanwhile, Core CPI, which excludes Food and Energy prices, is expected to maintain a steady year-over-year rate of 3.4%.
The anticipation of Fed interest rate cuts starting in September and easing US CPI data has weakened the USD, contributing to the bearish trend of the USD/JPY pair.
USD/JPY - Technical Analysis
The Japanese yen is experiencing a brief respite from its recent slide against the U.S. dollar, with USD/JPY trading down slightly at 161.705. The 4-hour chart paints a cautious picture, with the pair hovering just below a pivotal resistance level at 162.1200.
This level is a key battleground for bulls and bears alike, and a decisive break above could signal a resumption of the dollar's upward trajectory, with potential targets at 162.3800 and 162.7310.
However, the 50-day Exponential Moving Average (EMA) at 161.1100 is acting as a significant support zone. A failure to break above the pivot point could see the pair retreating towards this EMA, potentially even further down to the support levels at 160.7320 and 160.2550.
The Relative Strength Index (RSI) reading of 62 suggests the pair is not yet overbought, leaving room for further upside if buyers regain control.
Given the current technical setup, traders are advised to approach with caution. A prudent strategy would be to wait for a confirmed break above 162.1200 before initiating long positions.
Alternatively, aggressive traders could consider buying above 161.470, with a stop-loss order placed below 161.184. The initial target for profit-taking would be the pivot point at 162.120.
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EUR/USD Price Analysis – July 10, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has shown strength in recent sessions, maintaining gains above the 1.0821 and reaching an intra-day high of 1.0826. However, the reason for its upward trend can be linked to the cautious stance of Federal Reserve Chair Jerome Powell, which has weighed on the US Dollar.
Simultaneously, positive political developments in Europe, including the defeat of Marine Le Pen’s far-right National Rally in the French elections, have bolstered the Euro. This outcome signals political stability, easing fears and supporting the Eurozone economically.
Impact of Powell's Cautious Remarks on US Dollar and Euro Strength
Jerome Powell's recent comments about the US labor market have had a significant impact on the US Dollar's performance against major currencies like the Euro. He pointed out a noticeable slowdown in current labor market conditions compared to previous years, indicating a deceleration in economic momentum.
This cautious assessment implies that the Federal Reserve might postpone or adopt a more restrained approach to interest rate cuts, diverging from earlier market anticipations of aggressive monetary easing.
Following Powell's remarks, the US Dollar Index (DXY), which gauges the Greenback's strength against major currencies, encountered selling pressure. Investors perceived Powell's comments as indicating that the Fed might hold off on rate cuts unless there's clear evidence of easing inflationary pressures.
Hence, Jerome Powell's cautious remarks on the US labor market led to selling pressure on the US Dollar, impacting the EUR/USD pair. The Euro strengthened as investors anticipated a more restrained approach to rate cuts by the Federal Reserve.
Political Stability in France Boosts Euro Against US Dollar
On the other side, the shared currency has also found support from domestic political developments within the Eurozone, particularly in France. The failure of Marine Le Pen’s far-right National Rally to secure an absolute majority in the French elections has eased concerns about a potential widening of the French financial crisis.
Despite leading in the initial round, the party’s inability to form a majority government has reduced fears of political instability that could have impacted the Euro's value negatively.
Investors welcomed the outcome as it signaled a probable coalition government between President Emmanuel Macron's centrist alliance and the left wing, led by Jean-Luc Mélenchon. This political configuration is viewed favorably by markets due to expectations of continued policy stability and fiscal responsibility.
EUR/USD - Technical Analysis
The Euro (EUR) has displayed limited movement against the US Dollar (USD) in the latest session, currently trading at $1.08156. This price action comes amid a cautious market environment, with traders eyeing the pivot point at $1.08186, which coincides with the 50-period Exponential Moving Average (EMA).
This level serves as a crucial juncture, indicating potential support or resistance depending on the directional movement.
Immediate resistance for the EUR/USD pair is noted at $1.08307, with additional resistance levels at $1.08332 and $1.08453.
These levels represent significant barriers for any upward momentum. On the support side, immediate support is found at $1.08181, with subsequent support levels at $1.07990 and $1.07993, providing a safety net against downward pressure.
The Relative Strength Index (RSI) is currently at 46.96, suggesting a slightly bearish sentiment as it lies below the neutral 50 mark. This indicates that the pair might face selling pressure in the near term.
The 50 EMA at $1.08186 acts as a critical support level, and a breach below this could trigger further downside movement.
Traders should consider entering a sell position below $1.08177, targeting a take profit at $1.07990 with a stop loss set at $1.08307.
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GBP/USD Price Analysis – July 10, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair sustained its upward trajectory, stabilizing near the 1.2809 level and peaking intraday at 1.2812. This rise was driven by multiple factors, including a weakened US dollar and a hawkish stance from Bank of England (BoE) policymaker Jonathan Haskel.
Haskel advocated for maintaining current interest rates in response to ongoing inflationary pressures within the labor market. Meanwhile, the US dollar faced depreciation amidst increasing speculation that the Federal Reserve (Fed) might initiate interest rate cuts as early as September.
BOE's Cautious Interest Rate Stance and Impact on GBP Ahead of Key Economic Data
On the BOE front, policymaker Jonathan Haskel has suggested keeping interest rates unchanged amid ongoing inflation concerns in the UK job market. He stressed the need for greater confidence that inflationary pressures are easing before considering any rate adjustments.
This cautious stance has led to limited movement for the Pound Sterling (GBP) against other major currencies, with investors now focused on upcoming economic data releases.
Specifically, attention is on the upcoming reports on the UK's monthly Gross Domestic Product (GDP) and May's factory output figures, due later this week, which could provide further insights into the economy's health.
Impact of Speculation on Early Fed Rate Cuts on USD and Gold Prices
On the US front, the broad-based dollar is showing signs of weakening amidst mounting speculation that the Federal Reserve could commence rate cuts as early as September. This downward pressure on the USD has bolstered gold prices.
Federal Reserve Chairman Jerome Powell recently addressed the Senate Banking Committee, alluding to the potential for an interest rate reduction while avoiding specific mention of a timeline.
His remarks suggest a data-dependent approach, leaving the market hopeful for a rate cut in the near future. Therefore, the weakening US dollar, fueled by speculation of early rate cuts from the Federal Reserve, has supported GBP pair.
GBP/USD - Technical Analysis
The British Pound (GBP) has shown slight fluctuations against the US Dollar (USD) in the latest trading session, currently priced at $1.27871. The currency pair is navigating within a narrowing range, indicating potential volatility ahead.
The market is closely watching the pivot point at $1.27894, which aligns with the 50-period Exponential Moving Average (EMA), a crucial indicator that often signifies support or resistance.
Immediate resistance is identified at $1.28232, with further resistance levels at $1.28323 and $1.28446. These levels are critical as they represent potential hurdles for any upward momentum in the GBP/USD pair.
Conversely, immediate support lies at $1.27894, with subsequent support levels at $1.27350 and $1.27348. These support levels will be pivotal in cushioning any downside movement.
The Relative Strength Index (RSI) stands at 44.16, suggesting a mildly bearish sentiment as it hovers below the neutral 50 mark. This indicates that the market sentiment is leaning towards selling pressure, though not yet in oversold territory.
The 50 EMA at $1.27894 acts as a significant support level, and any breach below this could signal further bearish momentum.
For traders, a sell position below $1.27923 is advisable, targeting a take profit at $1.27350 with a stop loss set at $1.28323.
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- GOLD Price Analysis – July 10, 2024
GOLD Price Analysis – July 10, 2024
Daily Price Outlook
Gold (XAU/USD) has maintained its upward trend and remained well-bid around the 2,373 level, hitting an intra-day high of 2,374. The reasons for this upward trend could be linked to several factors, including geopolitical tensions, inflationary pressures, and a general shift towards safe-haven assets.
Additionally, central banks around the world have been consistently increasing their gold reserves, indicating strong institutional confidence in its value. These combined factors have contributed to the steady upward trend in gold prices, reinforcing its status as a valuable asset in uncertain times.
Impact of Speculation on Early Rate Cuts by the Federal Reserve on Gold Prices and the USD
On the US front, the broad-based dollar is weakening amid growing speculation that the Federal Reserve could begin cutting rates as early as September. This has pressured the USD and supported gold prices.
Federal Reserve Chairman Jerome Powell recently addressed the Senate Banking Committee, where he hinted at the possibility of an interest rate cut but refrained from specifying a date. His remarks suggest a data-dependent approach, leaving the market hopeful for a rate cut in the near future.
Therefore, the weakening US dollar, fueled by speculation of early rate cuts from the Federal Reserve, has supported gold prices.
Impact of Central Bank Gold Purchases on Gold Price Momentum
On the other side, the upward rally in gold prices has been further strengthened by consistent purchases from major central banks, despite the People’s Bank of China (PBoC) pausing its buying in May and June.
The overall demand from other central banks has effectively offset China’s absence. For example, India’s central bank acquired more than nine tons of gold in June, while the National Bank of Poland and the Czech National Bank bolstered their reserves by four and two tons respectively.
This widespread activity among central banks highlights strong global demand for gold that extends well beyond China.
According to Bert Melek, Head of Commodity Strategy at TD Securities, the ongoing purchases by these institutions signal broad and robust official sector support for gold, implying a bullish outlook for the commodity.
Despite the recent reduction in purchases by the PBoC, the strong demand from other central banks has significantly contributed to the upward momentum in gold prices, with projections now targeting levels as high as $2,475.
Therefore, the continued purchases by major central banks, despite China's recent pause, indicate robust global demand for gold. This strong institutional support suggests a bullish outlook, potentially pushing prices toward $2,475.
GOLD (XAU/USD) - Technical Analysis
Gold prices have shown a modest uptick in the latest trading session, buoyed by a slight dip in the US dollar. The precious metal is currently trading at $2,368.020, reflecting a 0.14% increase.
The gold market has seen consolidation around the $2,366.521 level, which aligns closely with the 50-period Exponential Moving Average (EMA).
The Relative Strength Index (RSI) at 54 indicates a neutral stance, suggesting that gold is neither overbought nor oversold at current levels. This equilibrium in RSI often precedes a significant price move, making it crucial for traders to watch closely for any emerging trends.
The key pivot point at $2,366.521 serves as a critical support level, reinforcing the current trading range. Immediate resistance is pegged at $2,379.352, followed by subsequent resistance levels at $2,391.215 and $2,402.888.
On the downside, immediate support is identified at $2,363.530, with next support levels at $2,355.365 and $2,354.352. These levels will be pivotal in determining the short-term trajectory of gold prices.
Traders should consider entering a buy position above $2,363, with a target of taking profit at $2,380 and a stop loss set at $2,354.
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AUD/USD Price Analysis – July 09, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well-bid around the 0.6738 level, hitting an intraday high of 0.6748.
The upward trend can be attributed to several factors, including rising expectations that the Reserve Bank of Australia (RBA) might raise interest rates again, spurred by strong inflation data for May. This has bolstered the AUD currency and contributed to gains in the AUD/USD pair.
Additionally, the upticks in the AUD/USD pair were further supported by weakness in the US dollar, which lost ground following soft US employment data. This has led traders to speculate that the Federal Reserve (Fed) might reduce interest rates sooner rather than later.
Impact of RBA Policy and Economic Indicators on AUD/USD Pair
On the AUD front, the currency's recent strength is linked to expectations that the Reserve Bank of Australia (RBA) may delay joining global rate cuts or even consider raising rates again, buoyed by strong May inflation figures.
Australia's 10-year government bond yield holding steady around 4.4% has also attracted foreign investment seeking stability amidst political uncertainties in the US and Europe.
The RBA's June Meeting Minutes highlighted their focus on monitoring inflation risks, noting that a significant price increase could necessitate much higher interest rates in response. These factors combined have supported the AUD's upward momentum against major currencies like the USD.
On the data front, Australia's Westpac Consumer Confidence dropped by 1.1% in July, reversing June's 1.7% increase, marking the fifth decline in 2024. This decline reflects ongoing concerns over high inflation, elevated interest rates, and a slow economy.
According to the Australian Bureau of Statistics, the country's trade surplus for May came in at A$5,773 million ($3,868 million), below expectations of A$6,678 million and down from A$6,548 million previously.
On a positive note, Australia's Retail Sales rose by 0.6% month-on-month in May, surpassing expectations of a 0.2% increase, indicating a stronger level of consumer spending compared to the previous month.
Therefore, the AUD's recent strength, bolstered by potential RBA rate stance and strong inflation data, has lifted it against the USD. Consumer confidence and trade surplus data, however, reflect mixed economic sentiment impacting AUD/USD trends.
Impact of US Economic Data and Fed Speculations on AUD/USD Pair
On the US front, the broad-based US dollar is losing momentum as soft employment data fuels speculation of earlier rate cuts by the Federal Reserve (Fed). Traders are now pricing in a 76.2% probability of a rate cut in September, up from 65.5% last week, according to the CME's FedWatch Tool.
Federal Reserve Chair Jerome Powell is scheduled to testify on the economy and monetary policy to Congress, where his remarks could influence market expectations.
Meanwhile, Federal Reserve Bank of Chicago President Austan Goolsbee remarked on the challenge of returning inflation to 2%, while Powell indicated the Fed's commitment to addressing disinflationary pressures.
On the data front, US Nonfarm Payrolls rose by 206,000 in June, exceeding expectations of 190,000, following a gain of 218,000 in May. The Unemployment Rate ticked up to 4.1% from May's 4.0%, while Average Hourly Earnings decreased to a 3.9% year-over-year growth rate in June, aligning with market forecasts.
Therefore, the AUD/USD pair could see upward pressure as the US dollar weakens on speculation of earlier Fed rate cuts due to softer employment data, increasing the likelihood of a stronger Australian dollar against the USD.
AUD/USD - Technical Analysis
The AUD/USD is currently trading at $0.67361 on the 2-hour chart. The pivot point is positioned at $0.67207 (Green line). Immediate resistance is observed at $0.67515, with further resistance at $0.67670 and $0.67867.
On the downside, immediate support is located at $0.67221, followed by $0.67029 and $0.66821. The 50-day Exponential Moving Average (EMA) is positioned at $0.67207, acting as a significant level for potential upward or downward movements.
The Relative Strength Index (RSI) is currently at 59.96, indicating a neutral to slightly bullish market sentiment.
This level suggests a balanced market, with potential for upward movements if the RSI increases further. The 50-day EMA at $0.67207 aligns closely with the current price, providing a crucial pivot point for traders to watch.
For traders, a strategic entry point is recommended above $0.67221, with a take profit level set at $0.67670 and a stop loss at $0.67029. Maintaining prices above the pivot point of $0.67207 could indicate a bullish trend continuation, whereas a move below this level might suggest a bearish reversal.
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GOLD Price Analysis – July 09, 2024
Daily Price Outlook
Gold prices (XAU/USD) have maintained their upward momentum and remained well bid around $2,363 per ounce and hitting an intraday high of $2,368. This surge is largely attributed to the weakening US dollar, which lost its ground on the back of the disappointing US employment data last week.
Furthermore, increased geopolitical tensions in the Middle East and political uncertainties in France are fostering a cautious market sentiment, bolstering gold prices.
Looking ahead, market participants are closely watching Fed Chair Jerome Powell's semi-annual Congressional testimony, along with speeches from Fed officials Michael Barr and Michelle Bowman. The upcoming release of US Consumer Price Index (CPI) inflation data on Thursday will also be crucial in shaping market expectations.
Impact of US Employment Data on the US Dollar and Gold Prices
On the US front, the broad-based US dollar is facing pressure as traders anticipate a Federal Reserve interest rate cut in September, spurred by last week's disappointing employment figures.
According to the CME FedWatch tool, there is now a 76% probability of a rate cut in September, up from 71% last Friday. This increasing expectation is contributing to the dollar's decline across financial markets.
On the data front, the US employment growth moderated in June, with Nonfarm Payrolls (NFP) increasing by 206,000, slightly above expectations of 190,000 but below May's revised figure of 218,000.
Concurrently, the Unemployment Rate rose to 4.1% from May's 4%. Wage growth, as indicated by Average Hourly Earnings, decelerated to 3.9% year-over-year in June from 4.1%, aligning with market forecasts.
Therefore, the anticipation of a Federal Reserve rate cut following weaker US employment data has softened the US dollar, boosting gold prices as investors seek safe-haven assets amid economic uncertainty.
Impact of Political Uncertainty and Chinese Demand on Gold Prices
Furthermore, gold prices could see additional upward momentum driven by cautious investor sentiment amidst political uncertainties in France and geopolitical tensions in the Middle East. Gold, traditionally considered a safe-haven asset during periods of turmoil, is increasingly appealing to investors seeking stability amidst global uncertainty.
However, the upward momentum in gold prices may face challenges as China, the world's largest gold consumer, kept its gold holdings unchanged for the second consecutive month in June, halting purchases after 18 months of consistent buying.
This pause in demand from a major buyer could alleviate some of the upward pressure on prices.
Gold prices could continue to climb amid global uncertainty, fueled by political tensions in France and the Middle East. However, China's pause in gold purchases after 18 months may ease upward pressure on prices.
GOLD (XAU/USD) - Technical Analysis
Gold Spot (XAU/USD) is currently trading at $2,359.260 on the 2-hour chart. The key pivot point is at $2,360.079 (Green line). Immediate resistance is observed at $2,367.000, with further resistance at $2,379.404 and $2,391.215.
On the downside, immediate support is located at $2,351.388, followed by $2,342.804 and $2,326.893. The 50-day Exponential Moving Average (EMA) is positioned at $2,360.079, while the 200-day EMA stands at $2,351.388.
The Relative Strength Index (RSI) is currently at 40.07, suggesting that the asset is approaching oversold territory. This level indicates potential buying interest may emerge if the RSI moves below 30. The 50-day EMA is at $2,360.079, closely aligning with the current price and acting as a pivot point for potential upward or downward movements. The 200-day EMA at $2,351.388 offers a critical support level that could determine the near-term direction of Gold.
For traders, a strategic entry point is recommended above $2,351 with a take profit level at $2,367. A stop loss should be set at $2,342 to manage risk effectively. Maintaining above the pivot point of $2,360.079 could indicate a bullish trend continuation, whereas falling below could reinforce a bearish outlook.
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