GOLD Price Analysis – June 07, 2024
Daily Price Outlook
Gold prices (XAU/USD) have continued their upward momentum, holding firm around the $2,339 mark and peaking at $2,387 during intraday trading. This surge is closely tied to the weakness of the US dollar, which has been losing ground amid growing expectations of a potential interest rate reduction by the Federal Reserve in September. However, the market sentiment favoring a rate cut, which has been reinforced by lackluster macroeconomic indicators from the United States.
Market participants are closely monitoring the upcoming release of the highly anticipated monthly employment data from the United States (US). The Nonfarm Payrolls (NFP) report, widely followed by traders, is expected to have a significant impact on the Federal Reserve's (Fed) future monetary policy choices.
Weak US Dollar and Fed Rate Cut Expectations Drive Gold Gains
On the other side, the US dollar experienced a decline, largely driven by the release of lackluster macroeconomic data from the United States. This has further solidified expectations that the Federal Reserve will initiate interest rate cuts in the coming months. Consequently, market sentiment is leaning towards an imminent rate reduction by the Fed in response to signs of economic deceleration.
As a result, expectations of a dovish stance from the Fed are keeping both US Treasury bond yields and the value of the US dollar subdued, hovering near multi-week lows.
On the data front, the US Department of Labor (DoL) recently reported an unexpected increase in the number of Americans filing for unemployment benefits, with claims rising to 229,000 for the week ending June 1. This data, along with the ADP's report on private-sector employment, suggests a slowing US labor market.
These indicators have reinforced expectations for a Federal Reserve rate cut in September and have contributed to a decline in US Treasury bond yields. Looking ahead, the upcoming Nonfarm Payrolls (NFP) report is projected to show an addition of 185,000 jobs in May, up from 175,000 the previous month, with the unemployment rate expected to remain steady at 3.9%.
Therefore, the bearish US dollar, fueled by sluggish economic data and expectations of a Fed rate cut, has kept US dollar lower and contributed to the gold gains.
Increasing tension In Gaza Spurs Demand for Safe-Haven Assets
On the geopolitical front, the recent Israeli attack on a UN-operated school in central Gaza has resulted in at least 40 fatalities, including children and women, and left dozens injured. The Israeli military stated that the strike targeted and killed Hamas fighters at the school. The Gaza Health Ministry reported that in the past 24 hours, at least 68 Palestinians have been killed and 235 have been wounded.
Meanwhile, Spain announces its intention to join South Africa's case against Israel at the International Court of Justice, accusing it of genocide. Since October 7, Israel's war on Gaza has claimed 36,654 lives and injured 83,309.
Therefore, the geopolitical tensions from the Israeli attack and ongoing conflict in Gaza, along with Spain joining a genocide case against Israel, are likely to increase gold prices as investors seek safe-haven assets.
GOLD (XAU/USD) - Technical Analysis
Gold prices are currently trading at $2373.21, reflecting a slight decline of 0.12%. The key pivot point is marked at $2387.24, which is crucial for today’s trading. Immediate resistance levels are positioned at $2406.55, $2428.05, and $2446.26, indicating potential upward barriers. On the downside, the immediate support levels are found at $2362.46, $2342.78, and $2315.46, providing key points where buyers might step in.
The technical indicators suggest a cautious outlook for gold. The Relative Strength Index (RSI) is currently at 59, showing a balanced market sentiment without a clear overbought or oversold condition. The 50-Day Exponential Moving Average (EMA) is positioned at $2346.95, which serves as a significant support level. A break below this EMA could indicate further bearish trends.
Considering the current technical setup, traders might consider an entry point for a sell position below $2385. The suggested take profit target is $2350, with a stop loss at $2405, offering a risk-to-reward ratio of 1:75. This strategy is designed to capitalize on the potential downside while minimizing risks.
In conclusion, gold's price trajectory suggests caution for traders. Maintaining below the pivot point of $2387.24 points to bearish potential, while a break above immediate resistance could signal a bullish reversal.
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- S&P500 (SPX) Price Analysis – June 7, 2024
S&P500 (SPX) Price Analysis – June 7, 2024
Daily Price Outlook
The S&P 500 index continued its downward trend, hovering around the 5,352 level and hitting an intraday low of 5,335. However, the reason for this decline can be attributed to the release of downbeat economic data from the United States. Reports, such as the recent increase in Americans applying for unemployment insurance benefits, showing concerns about the health of the US labor market. This, along with softer macroeconomic indicators, has fueled speculation about the Federal Reserve's monetary policy stance, particularly regarding potential interest rate cuts.
Furthermore, the long-lasting geopolitical tensions have put further bearish pressure on the the S&P 500. It is worth noting that the recent tragic attack by Israel on a UN-operated school in Gaza has intensified global tensions and injected uncertainty into financial markets.
Weak US Dollar and Fed Rate Cut Expectations
On the US front, the bearish US dollar, coupled with growing expectations of a Federal Reserve rate cut, has exerted additional pressure on the S&P 500 index. The US dollar dropped due to disappointing economic data, hinting at potential interest rate cuts by the Federal Reserve. However, the Department of Labor reported more people filing for unemployment benefits, suggesting a slower job market.
This, along with other employment data, fueled expectations for a Fed rate cut in September, pushing bond yields down further. Looking ahead, the upcoming Nonfarm Payrolls report is expected to show modest job gains, but the unemployment rate should stay steady.
On the data front, the US Department of Labor (DoL) recently reported an unexpected increase in the number of Americans filing for unemployment benefits, with claims rising to 229,000 for the week ending June 1. This data, along with the ADP's report on private-sector employment, suggests a slowing US labor market. These indicators have reinforced expectations for a Federal Reserve rate cut in September and have contributed to a decline in S&P 500 index.
Impact of Israel's Recent Attack on Gaza
On the other hand, the long-lasting tension in Gaza, including Israel's recent attack on a UN school, has shaken up financial markets, specifically the S&P 500 index. Investors, worried about the growing tension and humanitarian issues, are shifting their money away from risky stocks to safer options. This uncertainty in the Middle East is making markets more unpredictable, making investors nervous and leading to more selling of S&P 500 stocks. As per the latest report from Gaza Health Ministry reports, at least 68 Palestinians killed and 235 wounded in the past 24 hours.
S&P500 (SPX) - Technical Analysis
The SPX is currently trading at $5352.95, reflecting a minor decrease of 0.02%. Today's pivot point is positioned at $5392.00, a critical marker for determining market direction. Immediate resistance levels are set at $5430.80, $5473.04, and further up at $5516.00. On the support side, immediate levels are noted at $5335.97, followed by $5290.28 and $5247.18.
The Relative Strength Index (RSI) is at 64.00, indicating a moderately strong buying interest without yet reaching overbought conditions. The 50-Day Exponential Moving Average (EMA) is currently at $5255.08, offering a supportive base that aligns with the prevailing market trend, suggesting a continuation of the bullish outlook.
Given the current technical setup and key price levels, the outlook for the SPX remains bullish above the pivot point of $5392.00. Traders might consider entering a buy position above $5336, targeting a take profit level of $5390 with a stop loss set at $5290. This strategy provides a balanced approach to risk management, aligning with the broader market sentiment.
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USD/JPY Price Analysis – June 6, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair showed bullish performance and remained well bid around 156.19, hitting the intra-day high of 156.38 level.
The reason for its upward trend can be attributed to the US dollar, which is gaining strength against the Japanese yen as investors turn towards the US dollar in anticipation of the release of key US economic data, particularly the Nonfarm Payrolls (NFP) report scheduled for Friday.
The NFP report is closely watched by market participants as it provides insights into the health of the US labor market, influencing the Federal Reserve's monetary policy decisions.
Moreover, there is speculation that the Federal Reserve may implement rate cuts in the future. This speculation has put pressure on the US dollar, but anticipation of the NFP report has still driven investors towards the currency, resulting in a bullish performance of the USD/JPY pair.
Impact of Investor Sentiment and Economic Data on USD/JPY
On the US front, investors' turn towards the US dollar ahead of the NFP report, which has had a significant impact on the USD/JPY pair. Meanwhile, the mixed economic data from the US has fueled speculation of rate cuts by the Federal Reserve, anticipation of the NFP report has overshadowed these concerns, leading to increased demand for the US dollar.
However, uncertainty surrounding future monetary policy decisions by the Federal Reserve could limit the upside of the US dollar and the USD/JPY pair. If the NFP report fails to meet expectations or indicates weakening economic conditions in the US, it could further dampen investor sentiment towards the US dollar, thereby affecting the performance of the USD/JPY pair.
Impact of Japan’s Bond Yields on USD/JPY
On the other side, Japan's 10-year bond yield falling below 1% for the first time in two weeks has also influenced the USD/JPY pair.
However, the lower bond yields in Japan indicate reduced attractiveness of Japanese assets, prompting investors to seek higher-yielding assets such as the US dollar. Consequently, this has contributed to the bullish performance of the USD/JPY pair as investors favor the US dollar over the Japanese yen.
However, ongoing challenges in Japan's economy, including weak inflation and stagnant wage growth, continue to weigh on the Japanese yen and support the upward trend of the USD/JPY pair.
USD/JPY - Technical Analysis
USD/JPY is currently trading at $156.29, reflecting a marginal increase of 0.01% on a four-hour chart timeframe. The pivot point is positioned at $157.25, a crucial level for determining the market's direction.
Immediate resistance is observed at $156.59, followed by $157.72 and $158.62. On the downside, immediate support is found at $154.55, with subsequent levels at $153.65 and $152.77.
The Relative Strength Index (RSI) is at 52, indicating a balanced momentum without overbought or oversold conditions. The 50-day Exponential Moving Average (EMA) is at $156.59, aligning closely with the current price and suggesting consolidation around this level.
In conclusion, USD/JPY presents a cautious bullish outlook above $155.350. Traders are recommended to consider buying above this level, with a target of $157.250. A stop loss should be set at $154.500 to mitigate potential downside risks.
The current technical indicators and key price levels suggest that while the market shows a slight upward bias, significant movements depend on breaking through key resistance levels at $156.59 and $157.72.
Conversely, a drop below immediate support at $154.55 could shift the trend towards a bearish outlook, warranting close observation of subsequent support levels.
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AUD/USD Price Analysis – June 6, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6650 level, hitting the intraday high of 0.6683 level.
The reason for its upward trend could be tied to a hawkish statement by Reserve Bank of Australia (RBA) Governor Michele Bullock on Wednesday. Moreover, the previously released upbeat Trade Balance data in Australia was seen as another key factor that kept the AUD/USD pair higher.
On the other side, the broad-based US dollar bearish bias, driven by the Fed rate cut, has played its major role in supporting the AUD/USD pair's gains. Moving ahead, traders seem cautious to place any strong positions ahead of the release of US employment data on Friday, including Average Hourly Earnings and Nonfarm Payrolls.
AUD/USD Strengthens Despite Economic Data Disappointments
On the AUD front, the upticks in the AUD/USD pair were bolstered further after the hawkish statement from Reserve Bank of Australia (RBA) Governor Michele Bullock on Wednesday.
Bullock hinted at possible interest rate hikes if the Consumer Price Index (CPI) doesn't rebound to the target range of 1%-3%. She also noted a slight easing in the labor market, as reported by NCA NewsWire.
These remarks suggest a proactive stance from the RBA to maintain economic stability, which could bolster confidence in the Australian Dollar. Additionally, any positive developments in the CPI and labor market could further support the currency's upward momentum.
On the data front, Australia's Gross Domestic Product (GDP) released on Wednesday showed modest growth of 0.1% in the first quarter, below the expected 0.2%. Annually, the economy expanded by 1.1%, slightly lower than the anticipated 1.2%.
Judo Bank's Purchasing Managers Index (PMI) for May was 52.5, falling short of the expected 53.1, while the Composite PMI dipped slightly to 52.1 from April's 53.0, indicating a slower growth rate in Australia's private sector output for the fourth consecutive month.
Therefore, the AUD/USD pair strengthened on RBA Governor Bullock's hawkish tone, despite Australia's lower-than-expected GDP growth and weaker PMI figures, signaling ongoing investor confidence in the Australian Dollar.
AUD/USD - Technical Analysis
AUD/USD is currently trading at $0.66443, reflecting a modest 0.12% increase on a four-hour chart timeframe. The pivot point is set at $0.6702, serving as a critical marker for potential price movements.
Immediate resistance is identified at $0.6699, with subsequent levels at $0.6735 and $0.6771. On the downside, immediate support is found at $0.6591, followed by $0.6559 and $0.6528.
The Relative Strength Index (RSI) is at 46, indicating neutral momentum, suggesting neither overbought nor oversold conditions. The 50-day Exponential Moving Average (EMA) is positioned at $0.6648, just above the current price, which implies a slight bearish pressure in the short term.
In conclusion, the AUD/USD pair shows potential for bullish movement above $0.66320. Traders are advised to consider buying at or above this level with a target price of $0.67024. A stop loss should be set at $0.65923 to manage potential downside risks.
The current technical indicators and key price levels suggest a cautious but optimistic outlook for buyers, especially if the price stays above the pivot point of $0.6702.
However, if the price falls below immediate support at $0.6591, it may signal a shift to a bearish trend, warranting close monitoring of subsequent support levels.
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GOLD Price Analysis – June 6, 2024
Daily Price Outlook
Gold price (XAU/USD) maintained its upward trend and remained positive around the 2,361 level, hitting an intraday high of 2,374. The reason for its upward trend can be attributed to increasing speculation regarding a Fed rate cut, which undermined the US dollar and contributed to gold price gains.
Additionally, the ongoing conflicts in the Middle East were seen as another key factor that kept the safe-haven gold price higher.
Moving forward, traders are keeping their eyes on the release of the weekly Initial Jobless Claims data from the US. Additionally, the focus will remain on the US monthly employment details, particularly the Nonfarm Payrolls (NFP) report due on Friday.
Impact of Economic Data and Federal Reserve Expectations on Gold Prices and US Dollar
On the US front, the broad-based US dollar weakened due to recently released poor macroeconomic data. This has strengthened the belief that the Federal Reserve will likely begin cutting interest rates later this year.
As a result, markets are now expecting an imminent rate cut by the Fed in response to signs of a slowing economy. This anticipation has driven US Treasury bond yields to their lowest levels in over two months, further pressuring the US dollar.
On the data front, the ADP reported that US private sector employment rose by 152,000 in May, missing the forecast of 173,000 and down from a revised 188,000 in April. Meanwhile, the ISM Services PMI climbed to 53.8 in May, its highest reading since August, exceeding expectations of 50.8.
However, the Prices Paid sub-index decreased to 58.1 from 59.2. Additionally, Friday's softer US Personal Consumption Expenditures (PCE) Price Index data indicated easing inflationary pressures.
Therefore, these developments led to a decline in US Treasury bond yields, bolstering gold prices.
However, the anticipation of a Federal Reserve rate cut, combined with softer economic data, pushed US Treasury bond yields down, thereby supporting gold prices in the face of easing inflationary pressures and ongoing economic uncertainties.
Geopolitical Escalation in Gaza Drives Investors to Safe-Haven Assets, Boosting Gold Prices
On the geopolitical front, the conflict in Gaza has escalated. Israeli airstrikes and shelling have resulted in civilian casualties. Hamas, which controls Gaza, is demanding a permanent ceasefire and a complete Israeli withdrawal.
Additionally, food distribution issues are causing a rise in hunger-related deaths in Gaza. Since October 7, the conflict has resulted in over 36,000 Palestinian deaths and nearly 83,000 injuries.
Consequently, rising geopolitical tensions are driving investors to seek safe-haven assets like gold, boosting its price amid the prevailing uncertainty and instability.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2362.32, reflecting a 0.42% increase on a four-hour chart timeframe. The pivot point, set at $2383.00, serves as a critical level for determining the market direction.
Immediate resistance is identified at $2383.59, with subsequent levels at $2397.80 and $2412.74. On the downside, immediate support is found at $2334.40, followed by $2318.01 and $2300.52.
The Relative Strength Index (RSI) stands at 60, indicating a moderate upward momentum. The 50-day Exponential Moving Average (EMA) is positioned at $2343.88, suggesting that the current price is above the short-term average, reinforcing the bullish sentiment.
In conclusion, Gold maintains a bullish outlook above $2355. Traders are advised to consider buying at or above $2355 with a target price of $2383, while setting a stop loss at $2340 to manage potential downside risks.
The current technical indicators and key price levels suggest a favorable environment for buyers, particularly if gold prices continue to trade above the pivot point of $2383.00. However, vigilance is required as breaking below the immediate support level of $2334.40 could shift the sentiment to bearish, leading to potential declines towards the next support levels.
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GBP/USD Price Analysis – June 5, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward trend despite the Bank of England expected to deliver two rate cuts this year. It is currently trading around the 1.2771 level, having hit an intra-day high of 1.2784.
However, the reason for its upward trend could be attributed to the bearish US dollar, which recently lost traction due to previously released downbeat US economic data. This boosted expectations that the Federal Reserve will cut interest rates later this year.
In contrast, the BoE's expected rate cuts put downward pressure on the GBP/USD pair due to anticipated changes in interest rate differentials.
Impact of Speculated Fed Rate Cuts and Weak US Economic Data on GBP/USD Pair
On the US front, the broad-based US dollar edged lower due to growing speculation that the US Federal Reserve will cut interest rates in September, with the CME FedWatch tool showing a 65% chance of a rate cut, up from 47% a week ago.
This shift is driven by a weak US ISM Manufacturing PMI report for May and downwardly revised Q1 GDP data. These economic indicators have increased the likelihood of a Fed rate cut, affecting the dollar's momentum.
On the data front, the Job Openings and Labor Turnover Survey (JOLTS) showed a significant drop in job openings by 296,000 to 8.059 million in April, the lowest in over three years. This, along with weak US ISM Manufacturing PMI data, suggests a slowing US economy.
The ADP report is expected to show a smaller increase in private payrolls, 173K compared to 192K in April. The ISM Services PMI is projected to rise slightly to 50.5, indicating growth.
Therefore, the speculation of Fed rate cuts and weak US economic data are pressuring the USD, boosting the GBP/USD pair as the dollar weakens against the pound.
Anticipated Bank of England Rate Cuts and GBP/USD Impact
On the UK front, investors are eagerly awaiting signals from the Bank of England (BoE) regarding potential interest rate cuts. Market expectations suggest the BoE might implement two rate cuts this year, with August being the earliest possible time for this adjustment.
This anticipation reflects a move toward policy normalization amid economic uncertainties. As investors await clarity on the BoE's stance, the probability of rate cuts is influencing market sentiment and could impact the GBP/USD pair, with potential fluctuations as the market digests the BoE's decisions.
Thus, the anticipated rate cuts by the Bank of England could weaken the GBP against the USD due to shifts in interest rate differentials and market sentiment regarding the UK's economic outlook.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27798, up 0.01% on the four-hour chart. The currency pair is experiencing a minor uptick amid a generally cautious market environment. Key price levels to watch include a pivot point at $1.2818.
Immediate resistance is located at $1.2819, with further resistance levels at $1.2855 and $1.2893. On the downside, immediate support is observed at $1.2705, followed by supports at $1.2675 and $1.2644.
Technical indicators provide a moderately bullish outlook. The Relative Strength Index (RSI) is currently at 55, indicating that the pair is in neutral territory with a slight bias towards buying pressure.
The 50-Day Exponential Moving Average (EMA) is positioned at $1.2748, suggesting that the pair remains supported above this level.
In the current market scenario, the recommended entry price for a buy position is above $1.27605. Traders should set a take profit target at $1.28177, aligning closely with the pivot point, and place a stop loss at $1.27226 to manage potential downside risks.
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EUR/USD Price Analysis – June 5, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair failed to stop its downward trend and remained under pressure around the 1.0869 level, hitting the intra-day low of 1.0865.
However, the reason for its downward trend could be attributed to the fact that the ECB is widely expected to deliver a rate-cut move with a data-dependent approach for the interest rate path.
This tends to undermine the shared currency and contributes to the EUR/USD pair's losses. Furthermore, the bearish US dollar, driven by speculation that the US Federal Reserve will cut interest rates in September, was seen as one of the key factors that helped the EUR/USD pair limit its losses.
Looking forward, traders seem hesitant to take strong positions ahead of the release of US monthly employment details, the Nonfarm Payrolls (NFP) report on Friday. Meanwhile, the US ADP report on private-sector employment and the US ISM Services PMI will be in the spotlight.
Impact of Speculation on Fed Rate Cuts and Weak US Economic Data on EUR/USD Pair
On the US front, the broad-based US dollar dropped amid increasing speculation that the US Federal Reserve will cut interest rates in September. The CME FedWatch tool shows a 65% chance of a rate cut, up from 47% a week ago.
This shift follows a weak US ISM Manufacturing PMI report for May and downwardly revised Q1 GDP data, raising the likelihood of a Fed rate cut and impacting the dollar's momentum.
On the data front, the Job Openings and Labor Turnover Survey (JOLTS) revealed a notable decline in job openings, dropping by 296,000 to 8.059 million in April, the lowest in over three years. This, coupled with weak US ISM Manufacturing PMI data, implies a slowdown in the US economy.
The ADP report is anticipated to show a modest increase in private payrolls, with 173K compared to 192K in April. The ISM Services PMI is expected to slightly improve to 50.5, indicating growth.
Therefore, speculation of Fed rate cuts and weak US economic data are putting pressure on the US dollar, which is aiding the EUR/USD pair in limiting its losses.
EUR/USD Pair Under Pressure Ahead of ECB Rate Decision
On the EUR front, the declines in the EUR/USD pair were mainly bolstered by expectations that the ECB will deliver a rate-cut move with a data-dependent approach for the interest rate path.
Meanwhile, traders appear cautious ahead of the European Central Bank’s (ECB) interest rate decision this Thursday. Market watchers anticipate a 25 basis point cut in the Deposit Facility rate to 3.75%.
Investors are eager for clues about the ECB's future rate moves, especially given recent data showing a higher-than-expected rise in the Eurozone's annual Harmonized Index of Consumer Prices (HICP), service inflation, and Q1 Gross Domestic Product (GDP).
The ECB seems inclined to stay data-driven and delay further rate cuts, despite market expectations for two cuts this year.
Therefore, the cautious sentiment ahead of the ECB's decision is weighing on the EUR/USD pair, with investors closely monitoring for hints on future rate actions amidst signs of rising inflation and economic growth in the Eurozone.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.08776, virtually unchanged at -0.00% on the four-hour chart. The currency pair is showing signs of consolidation as it navigates through a narrow trading range.
Key price levels to monitor include a pivot point at $1.0860. Immediate resistance is located at $1.0915, with further resistance levels at $1.0943 and $1.0974. On the downside, immediate support is observed at $1.0829, followed by supports at $1.0811 and $1.0790.
Technical indicators provide a balanced outlook. The Relative Strength Index (RSI) is currently at 53, suggesting that the pair is in neutral territory with a slight inclination towards bullish momentum.
The 50-Day Exponential Moving Average (EMA) is positioned at $1.0853, providing a key support level just below the current price.
In the current market scenario, the recommended entry price for a buy position is above $1.08599. Traders should set a take profit target at $1.09036, aligning with the immediate resistance level, and place a stop loss at $1.08380 to manage potential downside risks.
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GOLD Price Analysis – June 5, 2024
Daily Price Outlook
Gold price (XAU/USD) managed to halt its previous-day losing streak and gained positive traction around the $2,332 level, hitting an intraday high of $2,341. However, the upward trend in the gold price was driven by a combination of factors, including the latest weakness in the US dollar.
The US dollar lost some of its gains on the back of previously released downbeat US economic data, which boosted expectations that the Federal Reserve will cut interest rates later this year.
In addition to this, renewed conflicts in the Middle East were seen as another key factor that kept the gold price higher.
Moving ahead, traders seem hesitant to take strong positions ahead of the release of crucial US monthly employment details, namely the Nonfarm Payrolls (NFP) report on Friday. Meanwhile, the US ADP report on private-sector employment and the US ISM Services PMI will be in the spotlight.
Weak US Dollar and Economic Concerns Drive Expectations of Rate Cuts, Fueling Gold Price Surge
On the US front, the broad-based US dollar was unable to maintain its upward trend and lost some of its gains, thanks to previously released downbeat US economic data, which boosted expectations that the Federal Reserve will cut interest rates later this year.
This belief has kept US Treasury bond yields low, benefiting gold prices. Meanwhile, ongoing concerns about the US economy softening more than expected have solidified expectations for a Federal Reserve rate cut in September, pushing Treasury bond yields lower and further supporting gold prices.
According to the previously released data, the Job Openings and Labor Turnover Survey (JOLTS) report revealed a larger-than-expected drop in job openings, down by 296,000 to 8.059 million in April, marking the lowest level in over three years.
This adds to concerns raised by the recent disappointing US ISM Manufacturing Purchasing Managers' Index (PMI) released earlier this week, indicating unexpected weakness in business activity and suggesting a slowdown in the US economy.
Thus, the weakening US dollar and concerns over the US economy have bolstered expectations of rate cuts, boosting gold prices.
Escalation of Conflict in Gaza Fuels Demand for Safe-Haven Gold Amid Humanitarian Crisis and Geopolitical Tensions
If talking about geopolitical issues, the situation in Gaza has escalated once more, with Israeli air attacks and shelling causing casualties among civilians and policemen. Israeli ground forces have entered the Bureij refugee camp, while airstrikes and artillery continue.
Hamas is insisting on a permanent truce and complete withdrawal from Gaza for any ceasefire negotiations to proceed.
Furthermore, hunger-related fatalities are on the rise in Gaza, with forecasts indicating worsening conditions until July unless there are adjustments to food distribution. Nevertheless, the toll from Israel's conflict with Gaza since October 7 comprises over 36,000 Palestinians killed and nearly 83,000 wounded.
Therefore, the escalation of conflict in Gaza, coupled with humanitarian concerns and geopolitical tensions, often leads investors to seek safe-haven assets like gold. Meanwhile, increased geopolitical instability can contribute to higher demand for gold as a hedge against uncertainty, pushing prices higher.
GOLD (XAU/USD) - Technical Analysis
Gold prices (XAU/USD) are currently trading at $2,330.40, up 0.46% on the four-hour chart. The metal has seen a slight uptick as it navigates through a complex technical landscape. Key price levels to watch include a pivot point at $2,341.28.
Immediate resistance is situated at $2,354.86, followed by further resistances at $2,364.43 and $2,376.47. On the downside, immediate support is found at $2,316.39, with subsequent supports at $2,304.52 and $2,292.00.
Technical indicators provide a mixed outlook. The Relative Strength Index (RSI) is currently at 44, suggesting that gold is neither overbought nor oversold, indicating potential for both upward and downward movements.
The 50-Day Exponential Moving Average (EMA) stands at $2,341.46, just above the current price, acting as a significant resistance level.
In the current market scenario, the strategic entry price is recommended below $2,342. A sell position at this level is advised with a take profit target set at $2,316. The stop loss should be placed at $2,360 to mitigate potential upward spikes that may breach the immediate resistance.
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AUD/USD Price Analysis – June 4, 2024
Daily Price Outlook
The AUD/USD currency pair remained bearish around the 0.6642 level, hitting an intraday low of 0.6631. The downward trend can be attributed to Australia's unexpected current account deficit of A$4.9 billion (USD 3.2 billion) in the first quarter, signaling weaker economic fundamentals and putting downward pressure on the AUD.
Additionally, the renewed strength of the US dollar, supported by higher US Treasury yields and prevailing risk aversion, contributed to the bearish trend. On the other hand, the RBA's concern about persistent inflationary pressure may support the AUD/USD pair by indicating potential interest rate hikes, thus limiting losses against the USD.
AUD/USD Pair Faces Pressure from Economic Data and Inflation Concerns
On the AUD front, the Australian Bureau of Statistics (ABS) reported a current account deficit due to increased imports, especially of consumption goods, which outweighed a decrease in exports, mainly coal and iron ore.
This news added pressure on the Australian dollar. Additionally, RBA Assistant Governor Sarah Hunter highlighted inflationary concerns, noting that inflation staying above the target range of 1%-3% is a key issue.
On the data front, Australia's Judo Bank Manufacturing PMI, released on Monday, showed a slight increase to 49.7 in May from 49.6 in April. This marks the fourth straight month of declining conditions in the manufacturing sector, suggesting ongoing challenges for this part of the economy.
Therefore, the AUD/USD pair faces downward pressure due to Australia's current account deficit and manufacturing sector challenges, alongside inflation concerns. However, potential interest rate hike expectations could counteract some of these effects.
US Dollar Strength Faces Challenges Amid Fed Comments and Weak Manufacturing Data
On the US front, the US Dollar is strengthening as US Treasury yields improve, amid risk-off market sentiment. However, the gains in the US dollar could be short-lived as Federal Reserve (Fed) officials suggested that the central bank could meet its 2% annual inflation target without further interest rate hikes.
Atlanta Fed President Raphael Bostic stated in an interview that he doesn't see the need for more rate hikes to achieve the target. Similarly, New York Fed President John Williams mentioned that while inflation remains high, it should ease in the latter half of 2024, signaling a cautious approach towards monetary policy adjustments.
On the data front, the ISM Manufacturing PMI unexpectedly fell to 48.7 in May, down from April's 49.2 and below the forecast of 49.6. This marks the second consecutive month of contraction for the US manufacturing sector, with 18 out of the last 19 months showing decline.
Therefore, the US dollar could face challenges despite its recent strength, as Federal Reserve officials hint at holding off on interest rate hikes despite improving Treasury yields. The unexpected drop in the ISM Manufacturing PMI may add to these pressures, impacting the USD and influencing the AUD/USD pair.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.66671, reflecting a decline of 0.28% in the 4-hour timeframe. The pivot point at $0.6680 is crucial, serving as a benchmark for potential price movements.
Immediate resistance levels are identified at $0.6709, $0.6735, and $0.6755. These levels indicate where the pair might face upward barriers.
On the support side, immediate support is at $0.6640, followed by $0.6616 and $0.6591. The 50-day Exponential Moving Average (EMA) is positioned at $0.6641, suggesting a near-term support level that traders should monitor closely.
The Relative Strength Index (RSI) is at 54, indicating a neutral market sentiment with a slight leaning towards bullishness.
The current technical setup suggests that the AUD/USD pair might continue to face downward pressure if it fails to break above the pivot point of $0.6680. Given the alignment of the 50 EMA close to the current price, a failure to hold above this level could result in further declines.
The recommended strategy under these conditions is to sell below $0.6680, targeting a take-profit level at $0.6640, with a stop loss at $0.6710.
In conclusion, the outlook for AUD/USD remains bearish below $0.6680. Immediate resistance levels at $0.6709, $0.6735, and $0.6755 could cap any potential upward movements.
On the downside, immediate support at $0.6640 and further levels at $0.6616 and $0.6591 should be monitored closely for signs of continued bearish momentum.
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GOLD Price Analysis – June 4, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to reverse its bearish trend and remained well supported around 2,333, hitting an intra-day low of 2,326. However, the cause for its downward trend can be linked to the risk-on market mood, which weakened Gold's safe-haven appeal.
However, the risk-on-market mood was being driven by the lower tensions in the Israel-Hamas conflict in the Middle East.
In contrast to this, the US dollar is under pressure due to rising projections of interest rate cuts from the Federal Reserve (Fed) later this year, as well as dismal US macro data on Monday. As a result, the bearish US dollar was considered as a crucial factor in limiting gold price losses.
Rate Cut Expectations & Bearish US Dollar Impact on Gold Prices
On the US front, the bond-based US dollar tried to recoup its losses but failed, remaining under pressure due to signs of lowering inflation and weak economic growth, which have heightened expectations of a rate cut this year from the Federal Reserve.
This perspective is supported by the unexpected decrease in the ISM Manufacturing PMI, which fell to 48.7 in May from 49.2 in April.
According to the CME FedWatch Tool, there is a more than 60% possibility that the Fed will cut interest rates by 25 basis points in September, which is why traders are increasingly betting on the move. This may help to limit losses in Gold prices by causing the US Dollar to fall to its lowest position since April 10.
According to data issued by the US Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) Price Index remained unchanged at 2.7% year on year, with the core gauge rising to 2.8%, in line with expectations.
Meanwhile, the biggest decline in new goods orders in nearly two years also impacted the US Institute for Supply Management's (ISM) Manufacturing PMI, which fell from 49.2 to 48.7 in May.
Eased Israel-Hamas Tensions & Its Impact on Gold Safe-Haven Appeal
Geopolitically, the appealing nature of silver as a safe haven has reduced as tensions between Israel and Hamas in the Middle East have eased. According to a Reuters story published on Monday, the US is asking for UN Security Council support for President Joe Biden's cease-fire proposal to end hostilities between Israel and Hamas militants in Gaza.
President Biden's suggestion for a ceasefire in Gaza was hesitantly accepted by Israeli Prime Minister Benjamin Netanyahu's cabinet on Sunday, suggesting a possible de-escalation in the region and influencing Gold long-standing safe-haven status in the financial markets.
GOLD (XAU/USD) - Technical Analysis
Gold is trading at $2,344.20, down 0.09% in the 4-hour timeframe. The pivot point at $2,352.26 serves as a critical level, dictating potential price movements. Immediate resistance levels are set at $2,364.03, $2,373.25, and $2,384.37. On the downside, immediate support is identified at $2,329.94, followed by $2,315.41 and $2,304.52.
Technical indicators suggest a cautious outlook. The Relative Strength Index (RSI) is at 50, indicating neutral market sentiment. The 50-day Exponential Moving Average (EMA) is positioned at $2,343.92, aligning closely with the current price, suggesting potential support around this level.
Given the current technical setup, the recommended strategy is to sell below $2,352, with a take-profit target at $2,330 and a stop loss at $2,365. The bearish sentiment is underscored by the market's inability to maintain levels above the pivot point, signaling potential further downside.
In conclusion, the outlook for gold remains bearish below $2,352, with immediate resistance levels offering potential barriers to upward movements. However, a break above this level could shift the bias towards a more bullish trend, warranting close monitoring of price action around these key levels.
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