GOLD Price Analysis – June 12, 2024
Daily Price Outlook
Gold price (XAU/USD) failed to stop its early-day losing streak and remained bearish around the 2,313 level, hitting an intraday low of 2,310.
The downward trend can be attributed to the renewed strength of the US dollar, which gained traction on the back of previously released stronger US economic data and the Fed's hawkish outlook towards the interest rate.
Moving ahead, traders seem cautious to place any strong bids due to a cautious sentiment ahead of the release of the latest consumer inflation figures from the United States (US) and the outcome of the highly anticipated Federal Open Market Committee (FOMC) meeting later this Wednesday.
US Economic Factors Impacting Gold Prices
On the US front, the broad-based US dollar has been gaining momentum amid growing investor confidence in the economy. In the meantime, the expectations for a Federal Reserve interest rate cut in September are fading due to strong labor market conditions and persistent inflation. This has pushed the US dollar to nearly a one-month high.
Investors are now focused on the release of the latest US consumer inflation figures and the upcoming FOMC monetary policy decision. The headline US Consumer Price Index is expected to ease slightly to 0.1% in May from the previous 0.3%, while the yearly rate is predicted to remain at 3.4%, surpassing the Fed's target of 2%.
Meanwhile, Core CPI is forecasted to stay at 0.3% for the month and decrease slightly to a 3.5% yearly rate from April's 3.6%, indicating persistent inflationary pressure. As a result, the Fed may opt for a modest 25 basis points rate cut later in the year, possibly in November or December.
Therefore, the strengthening US dollar, fading expectations of a Fed rate cut, and persistent inflationary pressures influence gold prices, with traders closely watching signals from the upcoming FOMC meeting.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,313.670, down 0.15% for the session. The pivot point at $2,318.74 is crucial, serving as a key level for determining market direction. Immediate resistance levels are situated at $2,337.06, $2,354.43, and $2,370.11.
These resistance points are critical as they represent potential obstacles for any upward movement in price.
On the downside, immediate support is found at $2,290.40, followed by $2,267.65 and $2,247.21. A break below these levels could indicate a more bearish trend, putting additional pressure on gold prices.
Technical indicators provide a mixed outlook. The Relative Strength Index (RSI) is currently at 45, suggesting neutral momentum with a slight lean towards bearish sentiment.
The 50-day Exponential Moving Average (EMA) stands at $2,332.64, with the current price trading below this level. This positioning indicates a bearish trend in the near term.
Given the current market setup, the conclusion remains bearish below the pivot point of $2,318. A recommended entry price for a sell position is $2,318, with a take profit level at $2,302. To manage risk, a stop loss is set at $2,326.
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AUD/USD Price Analysis – June 11, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to halt its bearish rally and remained under pressure around the 0.6595 level, hitting an intraday low of 0.6592. However, the downward trend can be attributed to risk-off market sentiment, which undermined riskier assets like the Australian dollar and contributed to the AUD/USD pair's declines.
Meanwhile, the decline in Australia's NAB Business Confidence and Business Conditions indices exerted pressure on the AUD currency. On the flip side, the bullish US dollar, backed by robust US jobs data for May, which has reduced the odds of two Federal Reserve interest rate cuts in 2024, was seen as another key factor that kept the AUD/USD pair under pressure.
AUD/USD Pair Analysis: Economic Indicators and RBA Policy Uncertainties
On the AUD front, traders anticipate that the Reserve Bank of Australia (RBA) will maintain higher interest rates this year. RBA Governor Michele Bullock suggested that if the Consumer Price Index (CPI) doesn't return to the target range of 1%-3%, they're ready to increase rates, as reported by NCA NewsWire.
National Australia Bank (NAB) Chief Economist Alan Oster noted concerns about economic growth but also highlighted worries about inflation. He expects the RBA to keep rates steady for a while as they navigate through these contrasting risks, according to the official transcript.
On the data front, Australia's NAB Business Confidence index hit a six-month low of -3 index points in May, turning negative for the first time since November. Business Conditions also dipped to 6 index points, slightly below the long-run average.
On Friday, Australia's Trade Balance widened to A$6,548 million in May, surpassing the expected A$5,500 million and April's balance of A$5,024 million. Imports fell sharply by 7.2% in May, reversing April’s 4.2% increase, while exports contracted by 2.5%, following a 0.6% decline previously.
Therefore, the AUD/USD pair may face pressure due to concerns over Australia's economic growth and inflation, alongside uncertainties regarding RBA's interest rate decisions, exacerbated by negative trade balance and business sentiment data.
Bullish US Dollar Impact on AUD/USD Pair Amidst Positive Jobs Data
On the US front, the broad-based dollar has strengthened following positive jobs data, reducing expectations of an imminent interest rate cut by the Federal Reserve in September. This has kept US Treasury bond yields high, bolstering the dollar.
However, the speculation that the Fed will maintain higher rates for a longer period has lowered the probability of a September rate cut to about 50%, with markets now anticipating only one 25 basis point cut later in the year.
According to the US Bureau of Labor Statistics (BLS), May's US Nonfarm Payrolls (NFP) rose to 272,000, up from April's 165,000. Average Hourly Earnings, a measure of wage inflation, increased to 4.1% YoY in May from April's revised 4.0%, exceeding the market expectation of 3.9%.
Therefore, the AUD/USD pair may face pressure as the stronger US dollar, buoyed by robust jobs data, reduces expectations for a near-term Fed rate cut. This could keep the pair under downward pressure.
AUD/USD - Technical Analysis
The AUD/USD pair experienced a slight decline of 0.19%, bringing its price to $0.66020. This minor dip suggests a bearish sentiment in the market, with technical indicators pointing towards potential further declines. As we analyze the 4-hour chart, key support and resistance levels come into sharp focus, guiding traders on possible price movements.
The pivot point is positioned at $0.6612, slightly above the current price, serving as a critical juncture. Immediate resistance is seen at $0.6650, with subsequent resistance levels at $0.6699 and $0.6735.
Should the price manage to break through these levels, it could signal a shift towards a bullish trend. However, the bearish momentum is more pronounced, as indicated by the immediate support at $0.6575. Further support can be found at $0.6538 and $0.6497, levels that could be tested if the downward pressure continues.
The Relative Strength Index (RSI) is currently at 42, indicating a bearish momentum but not yet oversold. This suggests there is room for further declines before a potential rebound. The 50-Day Exponential Moving Average (EMA) is at $0.6639, reinforcing the bearish outlook as the current price remains below this significant moving average.
In conclusion, given the prevailing technical indicators and key price levels, a bearish strategy is advisable. An entry price with a sell order below $0.66267 is recommended, targeting a take profit at $0.65748 while maintaining a stop loss at $0.66596 to manage risk.
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- USD/CAD Price Analysis – June 11, 2024
USD/CAD Price Analysis – June 11, 2024
Daily Price Outlook
The USD/CAD currency pair has prolonged its upward trend and remained well bid around 1.3777 level, hitting the intra-day high of 1.3785 level. This upward trend can be attributed to a combination of factors, including the strength of the US dollar and the decline in the price of West Texas Intermediate (WTI) crude oil.
The US dollar still bullish amidst a hawkish sentiment surrounding the Federal Reserve. However, the anticipation of the Fed maintaining interest rates steady within the range of 5.25%-5.50% to curb inflation toward its 2% target bolsters the US dollar's position.
Simultaneously, the decline in WTI crude oil prices exerts pressure on the commodity-linked Canadian dollar (CAD). Given Canada's status as the largest oil exporter to the United States, fluctuations in oil prices significantly impact the CAD.
Hawkish Sentiment Surrounding the Fed Boosts the US Dollar and Its Impact on USD/CAD
However, the bullish performance of the USD/CAD pair is closely tied to the hawkish sentiment surrounding the Federal Reserve as the robust US jobs data for May has diminished the odds of two Federal Reserve interest rate cuts in 2024, as indicated by the CME FedWatch Tool.
This reduction in the likelihood of a rate cut, particularly in September, supports the strength of the US dollar.
Investors are closely monitoring the Federal Reserve's upcoming interest rate decision scheduled for Wednesday, anticipating the central bank to maintain rates within the current range. This anticipation of monetary policy stability underpins the bullish outlook for the US dollar, consequently driving the USD/CAD pair higher.
Decline in WTI Price Puts Pressure on Commodity-Linked Canadian Dollar and Its Impact on USD/CAD
Despite positive job growth and wage increases in Canada, the Canadian dollar (CAD) faces challenges due to a rise in the unemployment rate to 6.2%, its highest in over two years.
Canada's heavy reliance on oil exports makes it vulnerable to fluctuations in oil prices, and the recent decline in the price of West Texas Intermediate (WTI) crude oil has exacerbated pressures on the CAD.
While crude oil prices are expected to rise due to increased fuel demand this summer, the current downturn in WTI prices adds strain to the Canadian economy.
Traders are closely watching Bank of Canada Governor Tiff Macklem's upcoming speech at the Conference of Montreal 2024 for insights into inflation discussions, which could further impact the USD/CAD pair's trend.
USD/CAD - Technical Analysis
The USD/CAD pair saw a modest increase of 0.05%, bringing its price to $1.37648. The pivot point is established at $1.3808, acting as a crucial level that the pair is currently trading below. Immediate resistance is observed at $1.3781, which, if breached, could open the path towards the next resistance levels at $1.3808 and $1.3846.
The ability to overcome these resistance points would indicate a strengthening bullish trend. On the flip side, immediate support is identified at $1.3702, with further support levels at $1.3663 and $1.3619, providing a safety net against potential declines.
The Relative Strength Index (RSI) is positioned at 65, indicating that the pair is approaching overbought territory. This suggests that while the upward momentum is strong, there may be limited room for additional gains without a correction.
Additionally, the 50-Day Exponential Moving Average (EMA) is located at $1.3690, supporting the bullish outlook as the current price is above this critical moving average.
In conclusion, the current technical setup favors a bullish strategy. An entry price with a buy limit at $1.37496 is recommended, targeting a take profit at $1.38084 while maintaining a stop loss at $1.37160 to manage risk.
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GOLD Price Analysis – June 11, 2024
Daily Price Outlook
The price of gold (XAU/USD) continued its downward trend, remaining under pressure around $2,303 and hitting an intraday low of $2,297. The decline was largely driven by the positive US Nonfarm Payrolls data released on Friday, which sparked speculation that the Federal Reserve might maintain higher interest rates for an extended period.
This bolstered the US dollar, contributing to the drop in gold prices. However, ongoing political instability in Europe and various geopolitical risks are expected to potentially mitigate further losses in gold prices.
Traders appear hesitant to take strong positions as they await the release of the latest US consumer inflation data and the upcoming FOMC decision on Wednesday. These events are expected to provide insights into the timing of potential rate cuts by the Federal Reserve.
Impact of Reduced PBoC Buying and European Political Uncertainty on Gold Prices
On the flip side, the People's Bank of China (PBoC) sharply reduced its gold buying in May, ending a one-and-a-half-year buying spree and contributing to the decline in gold prices. However, political uncertainty in Europe, such as French President Emmanuel Macron's decision to call snap elections, could support gold prices by increasing demand for safe-haven assets.
Additionally, ongoing geopolitical risks might help limit further losses for gold, despite the pressure from a stronger US dollar and reduced expectations of an imminent interest rate cut by the Federal Reserve.
Bullish US Dollar and Rate Cut Expectations Impact On Gold Prices
On the US front, the broad-based dollar has strengthened following positive jobs data, reducing expectations of an imminent interest rate cut by the Federal Reserve in September. This has kept US Treasury bond yields high, bolstering the dollar and weakening demand for gold.
Speculation that the Fed will maintain higher rates for a longer period has lowered the probability of a September rate cut to about 50%, with markets now anticipating only one 25 basis point cut later in the year.
This has pressured gold prices, as the stronger dollar and reduced likelihood of a September rate cut have diminished the metal's appeal to investors.
This has led to a decline in gold prices as the stronger dollar and reduced rate cut expectations weigh on the precious metal. Traders are cautious amid uncertainty about the Fed's future policy decisions.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) has experienced a modest decline of 0.39%, bringing its price to $2305.92. The 4-hour chart indicates a pivot point at $2305.19, just above the current trading price. Immediate resistance is noted at $2324.00, which, if breached, could lead to further gains towards $2354.43 and $2376.51.
However, if the price fails to overcome this resistance, it could continue to trend downwards. On the downside, immediate support is found at $2277.44, with additional support levels at $2255.06 and $2235.81, providing potential entry points for buyers looking to capitalize on lower prices.
The Relative Strength Index (RSI) is currently at 40, reflecting bearish momentum but not yet indicating an oversold condition. This leaves room for additional downward pressure before any significant rebound occurs.
Additionally, the 50-Day Exponential Moving Average (EMA) is at $2335.95, reinforcing the bearish outlook as the price remains below this critical moving average.
In conclusion, given the current technical indicators and price levels, a bearish strategy is advisable. An entry price with a sell stop at $2305 is recommended, targeting a take profit at $2277, while maintaining a stop loss at $2324 to mitigate risk.
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EUR/USD Price Analysis – June 10, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend and remained under pressure around the 1.0744 level, hitting an intra-day high of 1.0782.
The upward trend could be attributed to political uncertainty in the Eurozone after French President Emmanuel Macron called for a snap election, which weighed heavily on the Euro.
In the meantime, the bullish US dollar, gaining traction following stronger-than-expected US Nonfarm Payrolls (NFP) data, was seen as another key factor keeping the EUR/USD pair lower. This dampened expectations of Fed rate cuts in September, pushing the US dollar higher and contributing to losses in the EUR/USD pair.
Impact of Eurozone Political Uncertainty and ECB Policy on EUR/USD Pair
On the EUR front, the shared currency weakened due to political uncertainty in the Eurozone after French President Emmanuel Macron called for a snap election following strong gains by Marine Le Pen's far-right National Rally in European parliamentary elections. Macron's decision raised worries about political stability, thereby exerting pressure on the Euro.
Meanwhile, ECB policymakers expressed concerns about persistent inflation, particularly in the service sector, which could slow down the central bank's policy-easing efforts.
Despite this, ECB President Christine Lagarde emphasized the bank's data-dependent approach, indicating that future interest rate decisions will be based on economic conditions, especially considering the possibility of volatile inflation in the coming months.
Impact of Strong US Jobs Data on Currency Markets and Monetary Policy
On the US front, the previously released stronger-than-expected Nonfarm Payrolls (NFP) data has lowered the chances of Federal Reserve (Fed) rate cuts this year. This has strengthened the US Dollar and contributed to gains in the EUR/USD pair.
The robust US employment report has reduced expectations of a Fed rate cut before September, with futures traders seeing almost no chance of this happening, which is likely to support the USD for now.
On the data front, the US Nonfarm Payrolls (NFP) report for May surpassed expectations, with 272K fresh jobs added compared to the anticipated 185K. This strong labor demand extends Fed policymakers' leeway to maintain current interest rates.
Furthermore, Average Hourly Earnings, a gauge of wage inflation, exceeded forecasts, with annual wage inflation accelerating to 4.1% from the expected 3.9%. Month-on-month, wage inflation also rose sharply by 0.4%, higher than the projected 0.3%.
These robust figures indicate growing pressure on household spending, impacting future monetary policy decisions by the Federal Reserve.
Therefore, the strong US job figures and reduced expectations of Fed rate cuts have bolstered the US Dollar, putting pressure on the GBP/USD pair. Investors are now focused on the UK employment data for May, due on Tuesday.
Meanwhile, the US Consumer Price Index (CPI) and the Fed's decision this week will be in the spotlight.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.07498, down 0.48% for the day. The 4-hour chart reveals a critical pivot point at $1.0798, which is essential for determining the pair’s short-term direction. Immediate resistance levels are at $1.0806, $1.0836, and $1.0872. On the downside, immediate support is seen at $1.0728, followed by $1.0701 and $1.0674.
Technical indicators provide a mixed view. The Relative Strength Index (RSI) is at 23, indicating that the pair is in oversold territory, which might suggest a potential rebound if broader market conditions align.
The 50-day Exponential Moving Average (EMA) is positioned at $1.08528, which is above the current price, suggesting that the immediate resistance could be reinforced by the EMA, making it a critical level to watch for any potential breakout or reversal.
For traders, the recommended strategy would be to set a buy limit at $1.07383, with a take profit target at $1.07977 and a stop loss at $1.07043.
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- GOLD Price Analysis – June 10, 2024
GOLD Price Analysis – June 10, 2024
Daily Price Outlook
Despite the bullish US dollar, the precious metal gold has maintained its upward momentum, edging higher to around the $2,295 level and hitting an intra-day high of $2,300.
However, this upward trend can be attributed to the risk-off market sentiment, which has boosted demand for safe-haven assets like gold amid geopolitical tensions and uncertainty in financial markets.
Furthermore, the stronger US non-farm payrolls (NFP) report suggests that the Fed might delay starting its rate-cutting cycle. This keeps US Treasury bond yields higher and lifts the US dollar to a nearly one-month high, which, in turn, is seen as limiting gains in the gold price.
Moving ahead, traders seems cautious to place any strong bets ahead of the release of US consumer inflation data and the outcome of the two-day FOMC policy meeting.
Escalating Israel-Hamas Conflict and Gold Price Dynamics
In the ongoing conflict between Israel and Hamas, tensions have escalated with accusations of war crimes and significant casualties reported in the Gaza Strip. Hamas has accused Israel of committing a serious war crime in its attack on the Nuseirat refugee camp, resulting in the deaths of several individuals, including a US citizen. However, Israel denies these claims.
Meanwhile, the death toll in Gaza has risen to 274, including 64 children, with over 700 Palestinians injured. Additionally, Israeli war cabinet minister Benny Gantz has resigned, blaming Prime Minister Netanyahu for perceived failures in the Gaza war and calling for early elections.
The conflict has seen a significant loss of life and ongoing turmoil, with casualties and no immediate resolution in sight.
Therefore, the escalation of tensions between Israel and Hamas, coupled with accusations of war crimes and significant casualties, heightened geopolitical uncertainty. Investors may flock to safe-haven assets like gold, driving its price higher.
Impact of Positive US Job Data on Gold Prices
On the US front, the broad-based US dollar gained traction thanks to positive job data, putting downward pressure on gold prices.
The Nonfarm Payrolls report for May surpassed expectations, leading investors to revise their forecasts for a Federal Reserve interest rate cut in September. This has kept Treasury bond yields elevated and pushed the US Dollar to its highest level in nearly a month.
As a result, the likelihood of a September rate cut fell from 70% to around 50%, with markets now anticipating only one 25-basis-point reduction later in the year, possibly in November or December.
On the data front, the headline Nonfarm Payrolls (NFP) report showed that the US economy added 272,000 jobs in May, surpassing the expected 185,000 and the previous month's revised 175,000. This strong job growth overshadowed a rise in the unemployment rate to 4.0%.
Furthermore, Average Hourly Earnings increased by 4.1% over the past year, exceeding expectations. This wage growth could push prices higher and might require the Federal Reserve to keep interest rates elevated for a longer period.
Therefore, the stronger US dollar and positive job data exerted downward pressure on gold prices as investors revised expectations for a Federal Reserve interest rate cut, reducing the likelihood of September easing and delaying future cuts, impacting gold prices negatively.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,292.09, marking a slight decline of 0.02% on the day. On the 4-hour chart, gold is navigating a narrow range, reflecting cautious market sentiment amid broader economic uncertainties.
The pivot point, situated at $2,305.19, serves as a critical juncture for the day’s trading activities. Immediate resistance is identified at $2,327.58, followed by $2,354.43 and $2,387.56. These levels represent potential barriers that could cap any short-term rallies.
On the downside, immediate support lies at $2,277.44, with further support levels at $2,255.06 and $2,235.81. The technical indicators present a mixed outlook. The Relative Strength Index (RSI) stands at 31, indicating that gold is approaching oversold territory.
This could potentially signal a buying opportunity if the broader market conditions align. However, the 50-day Exponential Moving Average (EMA) at $2,340.10 suggests that there is significant resistance ahead, making upward movements challenging.
Given these conditions, the recommended strategy for traders is to set a sell limit at $2,305, with a take profit target at $2,255 and a stop loss at $2,330. This setup leverages the pivot point and immediate resistance level to manage potential risk and reward effectively.
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- GBP/USD Price Analysis – June 10, 2024
GBP/USD Price Analysis – June 10, 2024
Daily Price Outlook
During the European trading session, the GBP/USD pair continued its downward trend, remaining under pressure around the 1.2691 level and hitting an intra-day low of 1.2689. The reason for this can be attributed to the bullish US dollar, which gained traction following stronger-than-expected US Nonfarm Payrolls (NFP) data.
This dampened expectations of Fed rate cuts in September, pushing the US dollar higher and contributing to the GBP/USD pair's losses. Additionally, signs of more layoffs in the UK employment data could undermine the Pound Sterling (GBP) by increasing expectations of early rate cuts by the Bank of England (BoE).
Impact of US Nonfarm Payrolls on GBP/USD Pair and Key Events Ahead
On the US front, stronger-than-expected Nonfarm Payrolls (NFP) data has lowered the chances of Federal Reserve (Fed) rate cuts this year. This has strengthened the US Dollar (USD) and contributed to gains in the GBP/USD pair.
The robust US employment report has reduced expectations of a Fed rate cut before September, with futures traders seeing almost no chance of this happening, which is likely to support the USD for now.
On the data front, US Nonfarm Payrolls rose by 272,000 in May, exceeding the expected 185,000. The unemployment rate increased slightly to 4.0%, and average hourly earnings grew by 4.1% year-over-year, beating the 3.9% estimate. These figures indicate a stronger-than-expected job market.
The strong US job figures and reduced expectations of Fed rate cuts have bolstered the US Dollar, putting pressure on the GBP/USD pair. Investors are now focused on the UK employment data for May, due on Tuesday.
Additionally, the US Consumer Price Index (CPI) and the Fed's decision this week will be in the spotlight.
Impact of UK Employment Data on GBP/USD Pair
On the UK front, upcoming employment data on Tuesday, including Claimant Count Change, Employment Change, and Average Earnings, will be closely watched. If there are indications of increased layoffs, it could lead to expectations of early rate cuts by the Bank of England (BoE), weakening the Pound Sterling (GBP).
Investors are particularly sensitive to signs of economic weakness amid uncertainties, which may prompt the BoE to take preemptive measures. Thus, any negative surprises in the employment figures could put downward pressure on the GBP, contrasting with the strengthened USD due to favorable US job data.
GBP/USD - Technical Analysis
The GBP/USD pair is currently trading at $1.27176, reflecting a modest decline of 0.06% for the day.
Analyzing the 4-hour chart, the pair is moving within a defined range, indicative of cautious market sentiment ahead of key economic events. The pivot point at $1.2762 is crucial for determining the short-term direction of the pair.
Immediate resistance is observed at $1.2745, followed by higher resistance levels at $1.2779 and $1.2814. These levels represent potential barriers that the GBP/USD pair needs to overcome to initiate a sustained upward movement.
On the flip side, immediate support is noted at $1.2681, with subsequent support levels at $1.2645 and $1.2611. These support zones could provide a buffer against further declines.
Technical indicators present a mixed picture. The Relative Strength Index (RSI) is at 35, suggesting that the market is approaching oversold territory, which might indicate a potential rebound if broader market conditions support it.
Additionally, the 50-day Exponential Moving Average (EMA) is positioned at $1.2755, slightly above the current price. This suggests that the immediate resistance could be reinforced by the EMA, making it a critical level to watch for any potential breakout or reversal.
In conclusion, traders should consider a buy limit order at $1.27046, targeting a take profit level at $1.27618, with a stop loss set at $1.26667.
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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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EUR/USD Price Analysis – June 7, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair has shown a bullish trend in recent sessions, hovering around the 1.0895 mark and hitting an intra-day high of 1.0899. The upward trend can be attributed to several factors, including robust economic indicators such as the Eurozone's Harmonized Index of Consumer Prices (HICP) report, which revealed stronger-than-expected annual headline and core inflation figures.
Moreover, the shallow technical recession experienced by the Eurozone in the second half of the previous year has further bolstered optimism about the region's economic recovery, enhancing the attractiveness of the euro against the US dollar.
Fed Rate Cuts and Bearish US Economic Data Weigh on USD, Boost EUR/USD Pair
On the US front, the US dollar has been under pressure lately due to the possibility of rate cuts by the Federal Reserve, alongside gloomy economic data from the US. This has led to a boost in the EUR/USD pair. Meanwhile, the concerns about the health of the US labor market have been heightened by weak employment indicators, such as disappointing JOLTS Job Openings data, ADP Employment Change figures, and Initial Jobless Claims.
As a result, there's a growing anticipation that the Fed might resort to interest rate cuts in the coming months to spur economic growth and counteract the effects of weakening labor demand.
Traders are increasingly betting on rate cuts, as evidenced by the notable rise in the CME FedWatch tool, which now indicates a 68% probability of such action in September, up from the previous 54.5%. This heightened expectation has contributed to the weakening of the US dollar. Consequently, investors are turning to the euro as a favored alternative, resulting in a surge in the EUR/USD pair.
ECB Policy Easing and Inflation Outlook: Impact on EUR/USD Pair
On the flip side, the European Central Bank (ECB) has chosen to initiate a policy easing campaign, highlighted by a 25 basis point decrease in interest rates. This action could limit the upward momentum of the EUR/USD pair. The ECB's decision highlights its belief in the progress towards attaining its inflation target of 2%, as supported by recent data indicating a consistent decrease in inflation towards the desired level.
ECB President Christine Lagarde has underscored the ongoing struggle against inflation and emphasized the importance of vigilance in evaluating economic conditions. Despite upward revisions in inflation forecasts, the ECB maintains a cautious approach, recognizing uncertainties surrounding the economic outlook. This cautious stance, coupled with the absence of a clear interest-rate path, has introduced uncertainty in the forex market.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.08947, marking a slight increase of 0.07%. The pivot point for today’s trading is at $1.08869, indicating a critical level for assessing market sentiment. Immediate resistance levels are positioned at $1.09148, $1.09425, and $1.09696. On the downside, immediate support can be found at $1.08544, followed by $1.08287 and $1.08108.
The Relative Strength Index (RSI) is currently at 58, suggesting a moderate buying interest without signaling overbought conditions. The 50-Day Exponential Moving Average (EMA) stands at $1.08612, providing a supportive base that aligns with the current price level, reinforcing the bullish outlook.
Considering the technical indicators and key price levels, the outlook for EUR/USD today appears bullish above the pivot point of $1.08869. Traders might consider an entry point to buy above $1.08873, targeting a take profit level of $1.09310 with a stop loss set at $1.08654. This setup offers a favorable risk-to-reward ratio of 1:2, with potential profits per standard lot at $437 and potential losses at $219. For mini lots, the profit and loss stand at $43 and $21, respectively.
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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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