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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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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- AUD/USD Price Analysis – July 09, 2024
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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USD/CAD Price Analysis – July 09, 2024
Daily Price Outlook
During the European trading session, the USD/CAD pair maintained its upward trend despite the bearish US dollar. It is currently trading around the 1.3638 level, hitting an intra-day high of 1.3648.
The reason for its upward trend could be attributed to lower crude oil prices, which weighed on the Loonie and contributed to the USD/CAD pair's gains.
Meanwhile, the bearish US dollar, driven by soft employment data fueling speculation of earlier rate cuts by the Federal Reserve (Fed), was seen as a key factor that kept the lid on any additional gains in the USD/CAD pair.
Traders prefer to wait on the sidelines ahead of Powell’s semi-annual testimony and key US data. Additionally, Federal Reserve’s Michael Barr and Michelle Bowman are set to speak later on Tuesday.
Weak Canadian Employment Data and Lower Crude Oil Prices Drive Upward Trend in USD/CAD Pair
On the BoC front, the previously released weakening Canadian employment data raised expectations for rate cuts. Canada's unemployment rate rose to 6.4% in June from 6.2% in May, according to Statistics Canada.
Meanwhile, crude oil prices edged lower due to growing peace talks in the Middle East, putting selling pressure on the commodity-linked Canadian Dollar (CAD) since Canada is a major crude oil exporter to the United States. This combination of factors has contributed to the USD/CAD pair's upward trend.
US Dollar Weakens Amid Soft Employment Data and Rate Cut Speculation, Pressuring USDCAD 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 soft employment data and rising rate cut speculation are pressuring the USD, leading to potential weakness in the USDCAD pair as market expectations adjust accordingly.
USD/CAD- Technical Analysis
USD/CAD is currently trading at $1.36341 on the 2-hour chart. The pivot point is positioned at $1.36452 (Green line). Immediate resistance is observed at $1.36700, with further resistance at $1.36885 and $1.37099.
On the downside, immediate support is located at $1.36242, followed by $1.36036 and $1.35819. The 50-day Exponential Moving Average (EMA) is positioned at $1.36357, aligning closely with the current price and acting as a pivot point for potential upward or downward movements.
The Relative Strength Index (RSI) is currently at 52.52, indicating a neutral market position. This level suggests neither overbought nor oversold conditions, leaving room for potential moves in either direction.
The 50-day EMA at $1.36357 is a crucial level to watch, providing insight into the short-term trend. The alignment of the current price with the 50-day EMA suggests that any significant movement could establish a new trend direction.
For traders, a strategic entry point is recommended below $1.36452, with a take profit level set at $1.36036 and a stop loss at $1.36700. Maintaining prices below the pivot point of $1.36452 could indicate a bearish trend continuation, whereas a move above this level might suggest a bullish reversal.
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EUR/USD Price Analysis – July 08, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair extended its upward movement, reaching an intraday peak near 1.0843.
This rise was fueled by a weakening US dollar, which has been under pressure amid mounting speculation about potential rate cuts by the Federal Reserve.
Recent poor US economic indicators have heightened expectations that the Fed could start rate reductions as soon as September, with further cuts possibly following in December.
However, the upward momentum of the EUR/USD pair may face resistance due to uncertainties surrounding the outcome of France's election. Jean-Luc Mélenchon's unexpectedly strong showing for his left-wing party could potentially impact Eurozone policies and economic stability, tempering the euro's gains.
Impact of Weaker US Economic Data and Expected Fed Rate Cuts on EUR/USD Pair
On the US front, the broad-based US dollar has continued its decline as markets increasingly anticipate interest rate cuts by the Federal Reserve (Fed) in September, with potential further cuts in December.
This shift in expectations follows recent weaker US economic data. On the data front, the US Nonfarm Payrolls (NFP) report for June revealed a slowdown in hiring, with revised figures showing 110,000 fewer jobs added in April and May than initially reported.
Additionally, the Unemployment Rate unexpectedly rose to 4.1%, up from the anticipated and previous 4.0%.
Therefore, the weaker US economic data and expected Fed rate cuts have weakened the US dollar, impacting the EUR/USD pair positively as the euro strengthens against the dollar amid decreased rate hike expectations.
Impact of French Political Uncertainty and ECB Policy on EUR/USD Pair
Despite uncertainties in French politics, the euro has been performing well. Exit polls indicate that Jean-Luc Mélenchon's left-wing New Popular Front might create a coalition government, potentially ahead of Macron's centrist group and Le Pen's National Rally.
Since no single party has a clear majority, there are ongoing discussions about which individuals will fill government positions and who will become the next Prime Minister. Mélenchon has even suggested that Macron should resign to allow the left-wing coalition to take control of economic policies.
Meanwhile, concerns about high inflation have reduced hopes that the European Central Bank will lower interest rates soon. In June, inflation in the Eurozone stayed high at 2.9% compared to last year, mainly due to higher costs for services.
ECB President Lagarde emphasized the need to stay cautious, especially with ongoing pressures that could lower inflation, at the Sintra Forum.
Therefore, the uncertainty in French politics and concerns over inflation have kept the EUR/USD pair stable, with potential coalition outcomes influencing market sentiment while inflation worries affect ECB rate cut expectations.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.08365, reflecting a modest increase of 0.15%. The 4-hour chart reveals critical technical levels and indicators that traders should monitor. The pivot point is set at $1.0816, marking a crucial threshold for potential bullish or bearish movements.
Immediate resistance levels are identified at $1.0839, $1.0854, and $1.0872. A break above these levels could signal further upward momentum for the pair. Conversely, support levels are found at $1.0795, $1.0779, and $1.0763. A drop below these support points could trigger a significant selling trend.
The Relative Strength Index (RSI) is currently at 63, suggesting that the EUR/USD pair is in bullish territory but not yet overbought. Typically, an RSI level below 70 indicates room for further gains before potential overvaluation concerns arise.
The 50-day Exponential Moving Average (EMA) stands at $1.0790, reinforcing the bullish trend as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level supports the ongoing bullish sentiment.
Given the current market setup, an effective strategy would be to enter a buy position above $1.08294. Setting a take-profit target at $1.08540 aligns with immediate resistance levels, providing a favorable risk-reward ratio while capturing potential gains. A stop-loss at $1.08138, just below the pivot point, helps limit downside risk from unexpected market movements.
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GBP/USD Price Analysis – July 08, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward momentum, holding firm near the 1.2815 mark and reaching an intraday peak of 1.2822. This uptrend was fueled by several factors, including Keir Starmer’s landmark win in the UK parliamentary elections.
The Keir Starmer-led Labour Party gained an outright majority against Rishi Sunak’s Conservative Party.
The victory of the Labour Party with an absolute majority has brought political stability to the economy, resulting in significant strength in UK financial markets. On the other side, the bearish bias of the US dollar was seen as another factor that kept the GBP/USD currency pair higher.
Impact of Political Stability and BoE Uncertainty on GBP/USD Pair
On the BoE front, the near-term outlook for the British currency remains bullish following Keir Starmer-led Labour Party’s majority victory over the Conservative Party in the UK parliamentary elections.
This political stability has strengthened UK financial markets. However, uncertainty about the Bank of England's interest rate decisions remains high.
Despite annual headline inflation returning to the desired rate of 2%, financial markets currently see a 50% chance that the BoE will start reducing interest rates from the August meeting.
Therefore, the recent Labour Party victory boosts GBP/USD as political stability strengthens UK financial markets, though uncertainty over BoE rate cuts keeps the outlook mixed.
Impact on GBP/USD Pair Amid Weakening US Dollar and Fed Rate Cut Expectations
On the US front, the broad-based US Dollar weakened as the June Nonfarm Payrolls (NFP) report revealed weaker labor market conditions, with April and May job gains revised down by 111K and the Unemployment Rate unexpectedly rising to 4.1% from 4.0%.
These developments heightened expectations of earlier Federal Reserve interest rate cuts, with the CME FedWatch tool now showing a 75.8% probability of cuts in September, up from 64% a week ago.
Therefore, the US Dollar weakened broadly after the June NFP report showed weaker job growth and a higher unemployment rate, increasing expectations of earlier Fed rate cuts. This boosted the GBP/USD pair near 1.2800 as investors favored the Pound amid US economic uncertainty.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.28161, marking a modest increase of 0.05%. The 4-hour chart reveals several critical technical levels and indicators that traders should monitor closely. The pivot point is set at $1.2801, serving as a key threshold for potential bullish or bearish movements.
Immediate resistance levels are identified at $1.2837, $1.2865, and $1.2892. Breaking above these levels could signal further upward momentum for the pair. Conversely, support levels are found at $1.2767, $1.2735, and $1.2710. A drop below these support points could trigger a significant selling trend.
The Relative Strength Index (RSI) is currently at 69, suggesting that the GBP/USD pair is approaching overbought territory. Typically, an RSI level near 70 indicates that the asset may be overvalued, which could precede a price correction. Therefore, traders should be vigilant for any signs of a potential reversal.
The 50-day Exponential Moving Average (EMA) stands at $1.2743, reinforcing the bullish trend as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level supports the ongoing bullish sentiment.
Given the current market setup, an effective strategy would be to enter a buy position above $1.28038. Setting a take-profit target at $1.28407 aligns with immediate resistance levels, providing a favorable risk-reward ratio while capturing potential gains. A stop-loss at $1.27821, just below the pivot point, helps limit downside risk from unexpected market movements.
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GOLD Price Analysis – July 08, 2024
Daily Price Outlook
Gold (XAU/USD) continued its downward trend, remaining under pressure around $1800 and dipping to an intraday low of $1795. This decline can be attributed to several factors. Firstly, the US dollar strengthened, despite growing expectations of a Federal Reserve rate cut in September, exerting bearish pressure on gold.
Moreover, losses in the gold price were exacerbated by reports that China's Central Bank ceased gold purchases for the second consecutive month in June.
Looking ahead, traders are closely monitoring Federal Reserve Chair Jerome Powell's upcoming testimony on Tuesday. Following that, the market will focus on the release of US June Consumer Price Index (CPI) inflation data on Thursday, which is expected to provide further direction to the markets.
Impact of China's Central Bank Gold Reserves Stability on Gold Prices
On the other side, official data released on Sunday revealed that China's central bank, the People's Bank of China (PBoC), did not add any gold to its reserves for the second straight month in June, as reported by Bloomberg.
China's gold reserves remained unchanged at 72.80 million troy ounces at the end of June, the same as the previous month. The value of these reserves decreased slightly from $170.96 billion to $169.70 billion during the same period, according to the official data.
Therefore, the lack of gold purchases by China's central bank for the second consecutive month in June kept its reserves stable at 72.80 million ounces. This contributed to slight downward pressure on gold prices, reflecting reduced demand from a major buyer.
Impact of US Economic Data and Fed Rate Cut Speculation on Gold Prices
On the US front, the broad-based US dollar faced challenges in sustaining its upward momentum but held onto gains, despite growing speculation about potential interest rate cuts by the Federal Reserve in the third quarter.
This speculation could potentially soften losses for gold. Recent employment data have reinforced expectations of a rate cut in September, with market probabilities now indicating a 77% likelihood, up from 70% before the latest report.
On the data front, US Nonfarm Payrolls (NFP) increased by 206,000 jobs in June, surpassing the expected 190,000 and following a revised 218,000 rise in May (originally reported as 272,000).
Meanwhile, the Unemployment Rate rose slightly to 4.1% from May's 4%, while Average Hourly Earnings, a gauge of wage growth, declined to 3.9% year-over-year in June from 4.1% in May, meeting market forecasts.
Therefore, the stronger-than-expected US employment data, coupled with speculation of reduced Federal Reserve rate cuts, may bolster the US dollar and pressure gold prices downward amid reduced safe-haven demand.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,377.855, reflecting a decline of 0.36%. The 4-hour chart reveals critical technical levels and indicators that traders should closely monitor. The pivot point is set at $2,365.00, marking a significant threshold for potential bullish or bearish movements.
Immediate resistance levels are identified at $2,393.47, $2,402.26, and $2,409.80. A break above these levels could signal further upward momentum for gold. Conversely, support levels are located at $2,365.41, $2,357.04, and $2,349.09. A drop below these support points could trigger a significant selling trend.
The Relative Strength Index (RSI) stands at 58, suggesting that gold is currently in a neutral zone. Typically, an RSI level below 70 indicates there is still room for upward movement before the asset becomes overbought.
The 50-day Exponential Moving Average (EMA) is positioned at $2,355.64, reinforcing the bullish trend as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level supports the ongoing bullish sentiment.
Given the current market conditions, a prudent strategy would be to enter a sell position below $2,381. Setting a take-profit target at $2,365 aligns with immediate support levels, providing a favorable risk-reward ratio while capturing potential gains. A stop-loss at $2,393, just above the nearest resistance point, helps limit downside risk from unexpected market movements.
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EUR/USD Price Analysis – July 05, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its ascent, reaching a three-week high near the 1.0830 level. This upward movement was largely driven by weakness in the US dollar, which has been losing ground amidst growing speculation of Federal Reserve rate cuts.
Recent lackluster US economic data has fueled expectations that the Fed might slash rates as early as September, with further cuts possibly in December. As a result, the USD has declined for the fourth consecutive day, hitting a three-week low and boosting gold prices in the process.
Conversely, the Euro has seen increased demand amid political developments in France. Speculation that Marine Le Pen's far-right National Rally might not secure a majority in the legislative elections has bolstered the Euro's appeal.
This scenario unfolded as a coalition supporting President Emmanuel Macron strategically withdrew candidates, potentially preventing a far-right sweep.
Furthermore, expectations for imminent rate cuts by the European Central Bank (ECB) on July 18 have tempered, as recent data suggests that disinflation in the Eurozone may be stabilizing. This factor has also supported the EUR/USD pair's upward trajectory.
Impact of US Dollar Decline, Interest Rate Expectations, and Nonfarm Payrolls Report on Gold Prices and Federal Reserve Policy
Impact of Weakening US Dollar and Key US Economic Data on the EUR/USD Pair
On the US front, the broad-based US dollar has continued its decline as markets increasingly anticipate interest rate cuts by the Federal Reserve (Fed) in September, with potential further cuts in December.
This shift in expectations follows recent weaker US economic data, prompting the US Dollar (USD) to extend its decline for the fourth consecutive day, reaching its lowest level in over three weeks. This trend has significantly bolstered gold prices, underscoring their appeal amid the weakening dollar environment.
On the economic front, the highly anticipated Nonfarm Payrolls report is scheduled for release later today during the North American session. Analysts project that the report will indicate the US economy added 190,000 jobs in June, marking a decrease from the previous month's 272,000.
The unemployment rate is expected to hold steady at 4%, signaling stability in the labor market. However, there might be a slight slowdown in Average Hourly Earnings growth, with anticipated annual growth of 3.9%, down from May's 4.1% increase. These numbers are closely monitored as they offer critical insig
Therefore, the weakening US dollar amid anticipated Fed rate cuts has bolstered the EUR/USD pair, pushing it to a three-week high. Key US jobs data, including Nonfarm Payrolls and wage growth, will further influence its direction today.
Impact of French Political Developments and Eurozone Inflation Trends on the EUR/USD Pair
On the EUR front, the Euro is gaining support amidst expectations that Marine Le Pen's far-right National Rally may not secure an outright majority in France's legislative elections, thanks to tactical candidate withdrawals by President Macron's alliance and the left.
Meanwhile, the speculation about the European Central Bank (ECB) cutting rates further on July 18 has waned due to signs that inflation in the Eurozone, excluding volatile items, held steady with a 2.9% year-on-year increase in June, suggesting a pause in disinflationary trends.
These developments are likely bolstering the Euro against the US Dollar, as reduced political uncertainty in France and stabilizing inflation expectations lessen the urgency for ECB rate cuts, supporting the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.08282, marking a modest increase of 0.08% in early trading. On the 4-hour chart, several key technical levels could shape the pair's short-term direction. The pivot point at $1.0816 serves as a crucial marker for potential bullish or bearish movements.
Immediate resistance is seen at $1.0839, followed by $1.0854 and $1.0872. A break above these levels could signal further upside momentum, potentially pushing the pair towards higher resistance zones. Conversely, immediate support is located at $1.0795, with further supports at $1.0779 and $1.0763, which could provide buying opportunities if the price pulls back.
The Relative Strength Index (RSI) is currently at 73, indicating that the EUR/USD is approaching overbought conditions. Typically, an RSI at this level suggests that the asset may be overvalued, which could precede a price correction. Therefore, traders should be cautious and watch for any signs of a bearish reversal.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0769, reinforcing the bullish trend as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level supports the ongoing bullish sentiment.
Given the current market setup, an effective strategy would be to enter a buy position above $1.08166. Setting a take-profit target at $1.08443 aligns with immediate resistance levels, ensuring a favorable risk-reward ratio while capturing potential gains. A stop-loss at $1.08013, just below the pivot point, helps limit downside risk from unexpected market movements.
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S&P500 (SPX) Price Analysis – July 05, 2024
Daily Price Outlook
The global market sentiment has turned bullish, highlighted by the S&P 500 index's impressive surge to a new high of 5,539.27 on Friday, up 0.51%. This record-breaking rally was driven significantly by strong gains in the technology sector, particularly notable among megacap stocks like Tesla and Nvidia.
Despite concerns raised by recent economic data, including softer-than-expected readings in indicators such as ADP's private payroll growth and a contraction in the ISM Services PMI, investors remained optimistic.
Meanwhile, the decline in bond yields further bolstered sentiment, with traders speculating that these developments might prompt the Federal Reserve to consider interest rate cuts sooner rather than later.
Impact of Weakening US Dollar and Economic Data on Investor Sentiment and S&P 500 Performance
On the US front, the US dollar extended its downward trend, marking its fourth consecutive day of decline and hitting its lowest level in more than three weeks. This weakening trend is largely attributed to growing expectations of imminent rate cuts by the Federal Reserve, fueled by recent disappointing economic data releases.
The prospect of lower interest rates typically diminishes the dollar's appeal, enhancing the competitiveness of US exports and bolstering earnings for multinational corporations listed on the S&P 500.
On the data front, the US ISM Services PMI sharply declined to 48.8 in June, the largest drop since April 2020, well below expectations of 52.5 after May's 53.8.
The ADP Employment report showed US private businesses added 150,000 jobs in June, the smallest increase in five months, missing expectations of 160,000 and down from a revised 157,000 in May.
Therefore, the weakening US dollar and disappointing economic data, including a sharp decline in the ISM Services PMI and lower-than-expected job additions per the ADP report, supported investor expectations of Fed rate cuts, bolstering the S&P 500's resilience amid economic concerns.
Upcoming Nonfarm Payrolls Report and Its Impact on the Economy and Fed Policy
Looking ahead, market attention will pivot to the eagerly awaited Nonfarm Payrolls report, scheduled for release later today. Analysts forecast a moderate uptick of 190,000 jobs in June, following May's strong figure of 272,000.
The unemployment rate is anticipated to remain unchanged at 4%, suggesting stability in the labor market.
Additionally, focus will be on Average Hourly Earnings growth, expected to show a slight slowdown compared to the previous month. These metrics will offer vital insights into the US economy's health and could impact future Federal Reserve policy decisions.
S&P 500 - Technical Analysis
The S&P 500 is trading at $5537.01, up 0.51% in early trading. The 4-hour chart highlights several crucial technical levels that could influence market direction. The pivot point is located at $5522.92, serving as a significant marker for potential bullish or bearish movements.
Immediate resistance is seen at $5544.17, with subsequent resistance levels at $5556.37 and $5569.74. Should the index break above these levels, it could signal a continuation of the upward trend, potentially reaching new highs.
On the downside, immediate support is identified at $5507.19, followed by $5494.59 and $5475.71. These support levels could offer buying opportunities if the index experiences a pullback.
The Relative Strength Index (RSI) is currently at 72, suggesting that the S&P 500 is nearing overbought territory. An RSI at this level often indicates that the asset may be overvalued, which could precede a price correction. Therefore, traders should be vigilant and watch for any signs of a potential reversal.
The 50-day Exponential Moving Average (EMA) is positioned at $5472.05, reinforcing the bullish trend as long as the price remains above this average. The EMA acts as dynamic support, and maintaining a price above this level supports the ongoing bullish sentiment.
Considering the current market dynamics, an effective strategy would be to enter a buy position above $5555. Setting a take-profit target at $5575 aligns with immediate resistance levels, providing a favorable risk-reward ratio while capturing potential gains.
A stop-loss at $5535, just below the pivot point, helps limit downside risk from unexpected market movements.
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GOLD Price Analysis – July 05, 2024
Daily Price Outlook
Gold price (XAU/USD) maintained its upward trend and remained well bid around $2,363 per ounce, hitting the intra-day high of $2,366. This uptrend was driven by a weakening US dollar and rising speculation of Federal Reserve rate cuts.
Investors are increasingly anticipating rate cuts in September and potentially December, spurred by recent sluggish US economic indicators.
As a result, the US dollar (USD) has fallen for the fourth consecutive day, hitting a three-week low, thereby bolstering gold prices. On the other hand, the upbeat market sentiment was seen as a key factor that kept the lid on any additional gains in the Gold.
Impact of Weakening US Dollar and Anticipated Fed Rate Cuts on Gold Prices
On the US front, the broad-based US dollar continued its decline as markets increasingly anticipate interest rate cuts by the Federal Reserve (Fed) in September, with potential further cuts in December. This change in expectations comes on the heels of recent weaker US economic data.
As a result, the US Dollar (USD) has now extended its decline for the fourth consecutive day, reaching its lowest level in over three weeks. This trend has notably strengthened gold prices, highlighting their attractiveness amidst the weakening dollar environment.
On the data front, the highly anticipated Nonfarm Payrolls report is set to release later today during the North American session. Analysts anticipate the report will show the US economy added 190,000 jobs in June, a decline from the previous month's 272,000. The unemployment rate is expected to remain steady at 4%, indicating labor market stability.
However, Average Hourly Earnings growth might see a slight deceleration, with projected yearly growth of 3.9%, down from May's 4.1% increase. These figures will be closely watched as they provide crucial insights into the US economic health and could influence Federal Reserve policy decisions.
Therefore, the weakening US dollar and anticipation of potential Fed rate cuts are likely to bolster gold prices. Investors might increasingly seek alternative assets amid economic uncertainty and inflation concerns, further enhancing gold's appeal.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2365.060, up 0.24% as of this morning's session. The 4-hour chart reveals several critical technical levels that traders should closely monitor. The pivot point at $2360.44 is pivotal, serving as a potential inflection point for either a continuation of the bullish trend or a reversal.
Immediate resistance is identified at $2368.99, followed by $2377.06 and $2384.50. Breaching these resistance levels could signal further upward momentum, potentially driving the price towards new highs. Conversely, immediate support is found at $2347.61, with subsequent supports at $2341.81 and $2336.27. These levels may provide buying opportunities if the price experiences a pullback.
The Relative Strength Index (RSI) is currently at 74, indicating that gold is approaching overbought territory. Historically, an RSI at this level suggests that the asset may be overvalued, and a price correction could be imminent. Therefore, traders should exercise caution and watch for any signs of a bearish reversal.
The 50-day Exponential Moving Average (EMA) stands at $2331.40, reinforcing the bullish trend as long as the price remains above this average. The EMA acts as dynamic support, and a sustained price above this level suggests continued bullish sentiment.
Given the current market setup, a strategic entry point for buying would be above $2360. Setting a take-profit target at $2375 aligns with the immediate resistance levels, ensuring a favorable risk-reward ratio while capturing potential upside movement. A stop-loss at $2350, just below the immediate support, helps mitigate risk from unexpected price drops.
In conclusion, while gold (XAU/USD) maintains its bullish trajectory above the 50 EMA, the high RSI and key resistance levels warrant cautious optimism.
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