GOLD Price Analysis – Aug 13, 2024
Daily Price Outlook
Gold prices (XAU/USD) struggled to stop the early-day's downward momentum, remaining under pressure around the $2,460.07 level and reaching an intra-day low of $2,458.56.
This decline can be attributed to risk-on sentiment, which tends to reduce demand for safe-haven assets like gold.
However, rising geopolitical tensions in the Middle East and fears of a broader conflict in the region could help limit further losses for gold.
Moreover, heightened expectations that the Federal Reserve (Fed) might begin aggressively cutting interest rates in September have weakened the US dollar, potentially supporting gold prices in curbing further declines.
US Dollar Weakness and Fed Expectations Impact Gold Prices
On the US front, the broad-based US dollar is losing traction as dovish expectations for the Federal Reserve (Fed) weaken the currency, which is helping to cushion gold’s losses.
Markets are anticipating a significant 50 basis point interest rate cut by the Fed in September, providing further support to the yellow metal.
Meanwhile, upcoming US inflation data, including the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday, are expected to show cooling inflation in July, potentially giving the Fed more room to ease policy.
Market forecasts suggest a 0.2% increase in both headline and core CPI, following June's 0.1% decline in headline inflation.
However, if the CPI readings exceed expectations, it could dampen hopes for aggressive Fed rate cuts, potentially putting downward pressure on gold prices.
Rising Middle East Tensions and Global Uncertainty Drive Gold Demand
On the geopolitical front, rising tensions in the Middle East are driving demand for safe-haven assets like gold.
Israel has intensified operations near Khan Younis in southern Gaza, sparking fears of a broader regional conflict, especially as Israel prepares for possible retaliation from Iran and Hezbollah following the assassination of Hamas leader Ismail Haniyeh in Tehran.
Meanwhile, Russian President Vladimir Putin has warned Ukraine of a strong response to its recent incursion into the Kursk region.
These developments are creating uncertainty and supporting gold prices. In Gaza, an overnight Israeli strike killed at least 10 people, and the conflict has resulted in nearly 40,000 deaths and over 92,000 injuries in Gaza, with more than 1,100 killed in Israel during the October 7 Hamas-led attacks.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,462.635, down 0.32% on the 4-hour chart. The precious metal seems to be facing a period of consolidation as it hovers just above key support levels.
The pivot point at $2,473.57 is crucial today; if prices remain below this level, we could see further downside momentum.
Immediate resistance is found at $2,496.82, followed by stronger barriers at $2,515.33 and $2,535.14.
On the flip side, immediate support lies at $2,439.98, with subsequent support levels at $2,417.59 and $2,392.62.
The 50-day Exponential Moving Average (EMA) is positioned at $2,425.35, providing a solid floor for now.
The RSI is currently at 65, indicating that while the market isn't overbought, there is limited room for a further upward push before selling pressure increases.
Given the current setup, a sell limit at $2,473 with a target of $2,440 and a stop loss at $2,497 seems prudent.
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USD/CAD Price Analysis – Aug 13, 2024
EUR/USD Price Analysis – Aug 12, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair maintained its upward trend and remained well-bid around 1.0924, reaching an intra-day high of 1.0930.
This rally is largely due to a weaker US dollar, which lost ground amid rising expectations that the Federal Reserve (Fed) will cut interest rates at its next meeting.
Meanwhile, upbeat Eurozone economic growth of 0.3% also supports the EUR currency.
However, the Employment Change, a percentage measure indicating the increase in fresh payrolls, is expected to rise at a slower pace of 0.2% compared to the prior release of 0.3%, which may temper some of the positive sentiment.
Investors are waiting for key US inflation data before making significant moves on silver. This week’s reports include the Producer Price Index (PPI) on Tuesday, the Consumer Price Index (CPI) on Wednesday, and Retail Sales on Thursday.
In the Eurozone, revised Q2 GDP and preliminary Employment Change data will also be released on Wednesday.
These reports will influence Federal Reserve policy expectations, impacting the US dollar and, consequently, EUR/USD pair.
Impact of Eurozone Economic Growth and ECB Policy on EUR/USD
On the EUR front, the Eurozone's economy grew by 0.3% this quarter, matching earlier estimates and the previous quarter's growth. However, Employment Change is expected to slow to 0.2% from 0.3%, suggesting a more modest rise in new jobs.
Despite this, strong GDP figures are positive for the Euro (EUR) as they reduce the probability of further interest rate cuts by the European Central Bank (ECB).
Meanwhile, the ECB has shifted towards normalizing its policies, and investors are keen to see how much further the central bank will lower borrowing rates. Financial markets anticipate two more rate cuts this year.
Recently, Finnish ECB policymaker Olli Rehn highlighted that rate cuts could boost the Eurozone's economy, especially by supporting industrial growth and investment.
Consequently, the positive GDP growth and the expectation of fewer ECB rate cuts are likely to support the shared currency, strengthening the EUR/USD pair.
However, the slower Employment Change might limit gains, causing cautious trading around the EUR/USD.
Impact of Anticipated Fed Rate Cuts and CPI Data on EUR/USD
On the US front, traders are increasingly anticipating a Federal Reserve (Fed) rate cut at the next meeting, which could be beneficial for the EUR/USD pair.
However, the lower interest rates typically weaken the US dollar, making the EUR/USD pair more appealing.
According to the CME FedWatch Tool, there is a near-even chance of a rate cut, with a 49.5% probability of a 0.25% reduction and a 50.5% chance of a 0.50% cut in September.
On the data front, the Consumer Price Index (CPI) for July, due for release on Wednesday, is expected to show a 0.2% increase for both headline and core inflation, following a 0.1% decline in June.
The Producer Price Index (PPI), set for release on Tuesday, is forecast to rise by 0.1% in July, compared to a 0.2% gain in June.
If CPI exceeds expectations, it could impact the Federal Reserve's plans for rate cuts, potentially strengthening the USD and applying downward pressure on the EUR/USD pair.
Therefore, the Fed rate cuts could weaken the USD, making the EUR/USD pair more attractive. However, if CPI data exceeds expectations, it may lead to a stronger US dollar, exerting downward pressure on the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD is currently trading at $1.09204, showing a slight decline of 0.01% as the market remains cautious.
On the 4-hour chart, the pair is moving just below the pivot point at $1.0956, reflecting a neutral to bearish sentiment in the near term.
Immediate resistance is located at $1.0955, with further resistance levels at $1.1010 and $1.1043. These levels could act as targets if the euro gains momentum.
On the downside, immediate support is seen at $1.0867, with subsequent support at $1.0828 and $1.0777, which could be tested if the selling pressure increases.
The 50-day Exponential Moving Average (EMA) is positioned at $1.0891, slightly below the current price, indicating that the pair might find support around this level.
The Relative Strength Index (RSI) is currently at 53, suggesting a neutral stance, with neither overbought nor oversold conditions prevailing.
This RSI reading leaves room for potential upward movement, especially if the euro can maintain its position above the 50 EMA.
Given the current technical setup, a buy limit order at $1.08935 could be a strategic entry point, aiming for a take-profit target at $1.09557. To manage downside risk, a stop-loss should be placed at $1.08653.
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GBP/USD Price Analysis – Aug 12, 2024
GOLD Price Analysis – Aug 12, 2024
Daily Price Outlook
Gold (XAU/USD) started this week on a bullish track and drew further bids around the 2,442 level, hitting an intra-day high of 2,445.
The upward rally is attributed to increasing geopolitical risks and rising expectations that the Federal Reserve (Fed) will cut interest rates at its next meeting.
Lower interest rates are positive for Gold as they reduce the opportunity cost of holding a non-interest-paying asset.
Meanwhile, the conflict in Gaza is escalating, prompting investors to seek safe-haven assets.
According to Axios news, Israeli Defence Minister Yoav Gallant has reported that Israel anticipates a large-scale military attack by Iran, which could significantly escalate the conflict and threaten global stability.
Looking ahead, traders seem cautious about placing strong positions ahead of US inflation data.
The US Producer Price Index (PPI) will be released on Tuesday, followed by the Consumer Price Index (CPI) on Wednesday.
Additionally, US Retail Sales data on Thursday will influence expectations regarding Federal Reserve policy. Meanwhile, geopolitical developments will also be crucial in determining the near-term direction of the commodity.
Gold Prices Supported by Fed Rate Cut Expectations and Inflation Data
On the US front, traders are betting that the Federal Reserve (Fed) will cut interest rates at its next meeting, which is positive for Gold as lower rates reduce the opportunity cost of holding the non-interest-paying asset.
The Fed's likely move has sparked interest in Gold, with traders anticipating a 49.5% chance of a 0.25% rate cut and a 50.5% chance of a 0.50% cut in September, according to the CME FedWatch Tool.
On the data front, the Consumer Price Index (CPI) for July, due on Wednesday, is expected to show a 0.2% increase for both headline and core inflation, following a 0.1% decline in headline CPI in June.
Meanwhile, the Producer Price Index (PPI), to be released on Tuesday, is forecast to rise by 0.1% in July after a 0.2% gain in June.
If the actual CPI figure is higher than expected, it could lead to doubts about aggressive Fed rate cuts, potentially impacting Gold prices negatively.
Therefore, if the Fed cuts rates, Gold prices could rise as lower interest rates make holding Gold more attractive compared to interest-bearing assets. Higher rate cut expectations generally boost Gold demand.
Geopolitical Tensions Drive Gold Prices Up Amid Gaza Conflict
On the geopolitical front, Gold is rising as investors seek safe-haven assets amid fears that the Gaza conflict will escalate.
According to Israeli Defence Minister Yoav Gallant, Israel expects a large-scale military attack from Iran, which could further destabilize the region.
Recent Israeli attacks have killed at least 25 Palestinians in the past 24 hours, and since October 7, about 1.8% of Gaza’s population has been killed, with most victims under 30.
Hezbollah has also intensified the conflict by launching rockets into northern Israel, targeting several towns.
Hamas is urging the US, Qatar, and Egypt to implement a ceasefire plan proposed by President Joe Biden rather than continue with negotiations. The ongoing conflict has resulted in at least 39,897 deaths and 92,152 injuries in Gaza.
GOLD (XAU/USD) - Technical Analysis
Gold prices are currently hovering around $2,432.25, showing minimal movement with a slight decline of 0.01%.
The 4-hour chart reveals a cautious sentiment among traders as gold remains confined within a narrow trading range.
The immediate resistance is set at $2,431.41, just below the pivot point at $2,451.98. If the price breaks above this immediate resistance, we could see a rally toward the next resistance levels at $2,452.64 and $2,477.89.
Conversely, if the price fails to hold above the pivot point, immediate support is found at $2,380.82, with further downside potential leading to support at $2,354.48 and $2,335.02.
The 50-day Exponential Moving Average (EMA) is positioned at $2,420.84, which serves as a critical support level.
The current RSI reading of 58 suggests a neutral market sentiment with a slight bullish bias, indicating that the market may still have room to move higher before hitting overbought territory.
Given the technical setup, a buy position above the $2,420 level appears prudent, targeting a potential take profit at $2,450.
However, a stop-loss order should be placed just below $2,405 to manage risk in case of a downside reversal.
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EUR/USD Price Analysis – Aug 12, 2024
GBP/USD Price Analysis – Aug 12, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair struggled to maintain its upward momentum, trading around 1.2761 and reaching an intra-day high of 1.2782.
This rally was supported by steady market sentiment, which bolstered the GBP. Additionally, expectations of a 25 basis point interest rate cut by the Federal Reserve in September contributed to the GBP's strength against the USD.
Investors are closely watching upcoming UK employment data for June and the Consumer Price Index (CPI) for July, scheduled for release on Tuesday and Wednesday, respectively, which further influenced the GBP's performance.
GBP/USD Volatility Expected Amidst BoE Rate Cut Speculations and Inflation Concerns
On the BoE front, the Pound Sterling gained traction against most major currencies during Monday’s European session.
Investors are keenly awaiting the UK Employment data for June and the Consumer Price Index (CPI) for July, set to be released on Tuesday and Wednesday.
The UK Employment report is expected to show a slight rise in the ILO Unemployment Rate to 4.5% from 4.4%.
Average Earnings Excluding Bonuses, a key indicator of wage growth, is forecasted to slow significantly to 4.6% from 5.7%.
However, the decline in wage growth could lead to expectations of interest rate cuts by the Bank of England (BoE).
Despite this, BoE MPC member Catherine Mann expressed concern about rising goods and services prices and persistent wage pressures, indicating that inflation risks may remain, even with annual headline inflation at the bank’s 2% target.
Therefore, the GBP/USD pair may experience volatility as investors react to potential rate cuts from the BoE and ongoing inflation concerns, balancing expectations against the latest employment and wage data.
Impact of Federal Reserve Rate Cut Expectations and CPI Data on GBP/USD
On the US front, traders are increasingly betting on a Federal Reserve (Fed) rate cut at the next meeting, which could be positive for the GBP/USD pair.
Lower interest rates often lead to a weaker US dollar, making the GBP/USD pair more attractive.
According to the CME FedWatch Tool, there is a nearly even chance of a rate cut, with a 49.5% probability of a 0.25% cut and a 50.5% probability of a 0.50% cut in September. This anticipation is contributing to increased interest in the GBP/USD pair.
On the data front, the Consumer Price Index (CPI) for July, scheduled for release on Wednesday, is expected to show a 0.2% increase for both headline and core inflation, following a 0.1% decline in headline CPI in June.
Meanwhile, the Producer Price Index (PPI), set for release on Tuesday, is forecast to rise by 0.1% in July, after a 0.2% gain in June.
If the CPI comes in higher than expected, it could raise concerns about the Fed's plans for aggressive rate cuts, potentially exerting downward pressure on Gold prices.
If CPI exceeds expectations, concerns about the Fed's rate cut plans could boost the US dollar, potentially weakening the GBP/USD pair. Conversely, a rate cut would likely strengthen GBP/USD.
GBP/USD - Technical Analysis
The British pound is trading around $1.27628, experiencing a modest decline of 0.03% in the current session.
On the 4-hour chart, GBP/USD is hovering just below the pivot point at $1.2801, indicating a cautious market sentiment.
The immediate resistance is positioned at $1.2802, a level that, if breached, could lead the pair to test higher resistance levels at $1.2839 and $1.2889.
However, the pound remains under pressure, with immediate support seen at $1.2708. Should this support fail to hold, the next downside targets are at $1.2672 and $1.2633.
The 50-day Exponential Moving Average (EMA) is slightly below the current price, positioned at $1.2759, suggesting that the pair may find support around this level.
The Relative Strength Index (RSI) is currently at 54, indicating a neutral to mildly bullish outlook.
This RSI reading implies that the market is neither overbought nor oversold, providing room for potential upward movement if positive momentum gains traction.
Given the current technical setup, a buy limit order at $1.27486 could be strategically advantageous, with a take-profit target at $1.28008.
A stop-loss order should be placed at $1.27173 to mitigate risk in the event of further downside movement.
The key focus for traders will be on whether the pound can reclaim the pivot point at $1.2801, which could open the door for a more substantial rally.
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EUR/USD Price Analysis – Aug 12, 2024
EUR/USD Price Analysis – Aug 09, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair failed to break its consolidating phase and remained sideways around the 1.0917 level, consolidating within the range of 1.0911 - 1.0929. However, the ECB is expected to deliver two more rate cuts this year.
This stance undermined the shared currency and contributed to the EUR/USD pair's subdued trend.
On the other hand, expectations for Federal Reserve rate cuts increased significantly following the weak US Nonfarm Payrolls (NFP) report for July, raising concerns about a potential recession.
However, these recession fears were tempered by lower-than-expected Initial Jobless Claims for the week ending August 2, which weakened the US dollar and may limit further losses in the EUR/USD pair.
Impact of Mixed Fed Rate Cut Expectations and Jobless Claims on EUR/USD
On the US front, the US Dollar Index (DXY) is trading around 103.00 after retreating from a high of 103.50.
This shift comes amid growing expectations for Federal Reserve rate cuts, spurred by a weak Nonfarm Payrolls (NFP) report for July, which heightened recession fears and triggered a global equity sell-off.
However, recent data on Initial Jobless Claims for the week ending August 2, which showed 233K claims versus the 240K estimate, suggests the labor market may be stronger than anticipated. This could provide support for the dollar.
Gennadiy Goldberg from TD Securities highlighted that the jobless claims data is positive, indicating that the labor market remains relatively strong despite the weaker payroll report.
According to the CME FedWatch tool, investors are now less certain about the size of potential Fed rate cuts in September, with a 54.5% chance of a 50 basis point cut, down from 74% a week earlier.
Therefore, the US Dollar Index’s pullback and mixed Fed rate cut expectations may lead to a modest rise in EUR/USD, as weaker dollar sentiment offsets potential support from positive jobless claims data.
Impact of ECB Rate Cut Expectations and Cautious Inflation Targets on EUR/USD
Conversely, the ECB is anticipated to implement two more rate cuts this year in response to the struggling Eurozone economy and its aim to achieve the 2% inflation target.
Despite this, ECB officials remain cautious and are not committing to a specific rate-cut schedule, acknowledging the challenging path to reaching their inflation goal.
Finnish ECB policymaker Olli Rehn emphasized that while inflation is easing, attaining the 2% target will be difficult.
He suggested that rate cuts could support the Eurozone’s fragile industrial sector and stimulate investment.
Rehn's remarks underscore the ECB's cautious stance and its focus on providing economic support amid uncertain conditions.
Hence, the expectations of further ECB rate cuts and a cautious approach to inflation could weaken the euro. This may lead to a rise in EUR/USD if the dollar remains under pressure from mixed Fed rate cut expectations and economic uncertainty.
EUR/USD - Technical Analysis
The EUR/USD pair is trading at $1.09202, up a modest 0.05% on the day, reflecting a cautious market sentiment.
The 4-hour chart suggests the pair is struggling to find clear direction, with the price hovering below the pivot point at $1.0956.
The Relative Strength Index (RSI) stands at 52, indicating a neutral market tone where neither the bulls nor bears have a clear advantage.
Immediate resistance is pegged at $1.0955, just below the pivot point. A break above this level could open the door for further gains, with the next resistance levels at $1.1010 and $1.1043.
These are crucial for the pair, as overcoming them could signal a shift towards a more sustained bullish trend.
The 50-day Exponential Moving Average (EMA), currently at $1.0881, serves as a key support, reinforcing the broader upward bias as long as the price remains above this level.
On the downside, immediate support lies at $1.0867, with further support at $1.0828 and $1.0777.
A breach of these levels could indicate a potential reversal in the current trend, inviting bearish momentum into the market.
Given the mixed technical signals, a strategic approach might involve entering a buy position near $1.08935, with a take profit target set at $1.09557 and a stop loss at $1.08653.
This setup offers a balanced risk-reward ratio while capitalizing on the potential for a near-term recovery.
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S&P500 (SPX) Price Analysis – Aug 09, 2024
GOLD Price Analysis – Aug 09, 2024
Daily Price Outlook
Gold prices (XAU/USD) initially struggled to maintain their upward momentum but regained positive traction, climbing to around $2,426 and reaching an intra-day high of $2,428.
The mild bullish movement was driven by growing expectations that the Federal Reserve could begin reducing interest rates as early as September, which weakened the US dollar and supported gold gains.
However, the stronger-than-expected US labor market report released on Thursday eased recession fears and bolstered investor confidence, diminishing demand for safe-haven assets like gold.
Additionally, concerns over escalating geopolitical tensions in the Middle East provided further support, helping gold limit its losses.
Impact of US Economic Data and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar has been declining as markets have fully priced in a 25-basis point rate cut by the Federal Reserve in September, with speculation of a possible 50-basis point cut.
This expectation has provided some support for gold prices. However, a strong labor market report released on Thursday eased fears of an imminent recession and boosted investor confidence, reducing gold's appeal as a safe-haven asset.
This shift in sentiment led to a rally in US equity markets, which further limited gold's gains.
Meanwhile, the anticipation of a dovish Fed stance has pushed US Treasury bond yields lower and dragged the US dollar away from its weekly high, providing additional support for XAU/USD.
On the data front, the US report released on Thursday revealed that initial jobless claims for the week ending August 3 came in at 233,000, beating expectations of 240,000 and down from the previous week's 249,000.
This stronger-than-expected data alleviated concerns about a potential economic downturn in the US, leading to a rise in US Treasury bond yields and applying downward pressure on the US Dollar.
Therefore, the strong US labor market data and rising Treasury yields limited gold's appeal, but expectations of a dovish Fed and a weaker US Dollar provided some support for prices.
Rising Geopolitical Tensions and Its Impact on Gold Prices
On the geopolitical front, Israeli forces have launched a new offensive on Khan Younis in southern Gaza, targeting about 30 sites and issuing new evacuation orders to residents who have already been displaced multiple times.
Leaders from Qatar, Egypt, and the United States have invited Israel and Hamas to resume ceasefire talks on August 15 amid rising regional tensions and fears of retaliatory strikes.
Israel has accepted the invitation to meet in Cairo or Doha, but Hamas has not yet responded. Recent attacks by Israel on two schools in Gaza City have killed at least 15 people and injured 30.
As per the latest report, the conflict has resulted in approximately 39,699 deaths and 91,722 injuries in Gaza.
The ongoing conflict and geopolitical tensions typically drive gold prices higher as investors seek safe-haven assets. Increased uncertainty and violence often boost demand for gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,422.70, down 0.24% on the day. The 4-hour chart indicates a mixed technical landscape, with the price holding above the pivot point at $2,412.90 but showing signs of hesitancy near the immediate resistance level at $2,431.41.
The Relative Strength Index (RSI) at 55 suggests the market is in neutral territory, neither overbought nor oversold, indicating potential for both upward and downward movement.
The 50-day Exponential Moving Average (EMA) at $2,417.15 acts as a critical support level, reinforcing the bullish sentiment if the price remains above it.
However, should gold fail to breach the immediate resistance, it may retrace toward the first support level at $2,380.82.
Further downside could see the price testing the next support levels at $2,354.48 and $2,335.02, which are key areas to watch for potential buying interest.
On the upside, a break above $2,431.41 could trigger bullish momentum, pushing the price toward the next resistance levels at $2,452.64 and $2,477.89. These levels are crucial for gold bulls aiming for a sustained rally.
Given the current market dynamics, entering a buy position near the pivot point at $2,413, with a take profit target at $2,447 and a stop loss at $2,398, could offer a balanced risk-reward ratio.
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EUR/USD Price Analysis – Aug 09, 2024
S&P500 (SPX) Price Analysis – Aug 09, 2024
Daily Price Outlook
During the European trading session, the S&P 500 index maintained its upward trend and edged higher to around 4,319.31, marking its strongest performance since November 2022.
This rally was driven by a combination of factors, including upbeat U.S. economic data and investor optimism regarding Federal Reserve policy.
Meanwhile, the recent downturn in the U.S. dollar provided additional support for equity markets.
As the dollar weakened, it reduced the impact of international uncertainties on U.S. companies and boosted the appeal of U.S. assets.
Moreover, the S&P 500's rise was fueled by positive earnings reports from major companies like Eli Lilly, which saw a 9.5% increase in its stock price.
Tech giants such as Nvidia, Broadcom, Meta Platforms, and Apple also contributed to the index's gains, recovering from earlier losses and demonstrating resilience amid market fluctuations.
U.S. Economic Data and Fed Rate Cut Expectations Boost S&P 500
On the U.S. front, previously released economic data played a crucial role in the S&P 500's upward momentum.
The Labor Department reported that initial jobless claims for the week ending August 3 totaled 233,000, lower than the Dow Jones estimate of 240,000.
This decline eased recession fears and bolstered investor confidence in the U.S. labor market's resilience.
In the meantime, the growing expectations that the Federal Reserve might cut interest rates as early as September contributed to positive market sentiment.
The anticipation of a potential rate cut, combined with a weaker U.S. dollar, created a supportive environment for equities.
As investors priced in a 25-basis point rate cut, with speculation of a 50-basis point cut, the S&P 500 benefited from improved market conditions and reduced borrowing costs.
Geopolitical Tensions and Their Mixed Impact on the S&P 500
On the geopolitical front, the increasing tensions in the Middle East have had a mixed impact on the S&P 500 index.
Recent escalations in the Gaza conflict, including new Israeli offensives and rising civilian casualties, have introduced volatility into global markets.
Typically, such geopolitical instability contributes to market uncertainty, leading to risk-off sentiment that can negatively impact equity markets.
However, the S&P 500's recent gains suggest that investors may be prioritizing positive economic indicators and Federal Reserve policy expectations over geopolitical risks.
Meanwhile, the ongoing conflicts and diplomatic efforts, such as ceasefire talks led by Qatar, Egypt, and the U.S., could influence market sentiment in the near term.
If tensions escalate further or result in broader regional instability, they could dampen the current bullish outlook for the S&P 500.
S&P 500 - Technical Analysis
The S&P 500 is trading at $5,319.30, up 2.30% on the day, signaling a robust bullish movement in the market. The 4-hour chart suggests that the index is benefiting from strong upward momentum, having surpassed the pivot point at $5,249.75.
However, with the Relative Strength Index (RSI) at 45, the market is neither overbought nor oversold, indicating that the current rally may still have room to run, but caution is warranted.
Immediate resistance is identified at $5,385.42. A break above this level could lead to further gains, with the next resistance targets at $5,508.57 and $5,665.95.
These levels are critical as they could dictate whether the S&P 500 continues its upward trajectory or faces a potential pullback.
The 50-day Exponential Moving Average (EMA), currently at $5,486.47, suggests that the broader trend remains bullish, though a correction could occur if prices fail to sustain above this average.
On the downside, the immediate support level is at $5,128.77, followed by $5,049.14 and $4,957.26.
These levels will be key for traders watching for any signs of weakness or a potential reversal.
Given the current technical setup, entering a buy position near $5,247 with a take profit target at $5,380 and a stop loss at $5,178 could provide a favorable risk-reward scenario, capitalizing on the continued bullish sentiment.
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EUR/USD Price Analysis – Aug 09, 2024
GOLD Price Analysis – Aug 08, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained their upward momentum, attracting strong bids around the 2,399 level and reaching an intra-day high of 2,400. The rally was fueled by growing expectations that the Federal Reserve will begin reducing interest rates as early as the September meeting.
This dovish outlook was reinforced by disappointing US economic data, signaling a faster-than-expected slowdown in the world's largest economy. The resulting economic uncertainty has heightened speculation about more substantial rate cuts by the Fed, further enhancing the appeal of non-yielding assets like gold. Additionally, escalating tensions between Iran and Israel have served as another key driver, boosting gold’s status as a safe-haven asset.
US Economic Data and Federal Reserve Expectations Boost Gold Prices
On the US front, the broad-based US dollar remained under pressure, struggling to gain traction as softer economic data signaled a faster-than-expected slowdown in the world's largest economy. This has fueled speculation about larger interest rate cuts by the Federal Reserve, thereby supporting the non-yielding yellow metal, gold.
On the economic data front, government figures released on Tuesday showed that the US trade deficit narrowed by 2.5%, falling to $73.1 billion in June from $75.0 billion in May. This decrease was largely driven by a 1.5% rise in exports, particularly in aircraft and US-produced oil and gas.
As a result, markets are now fully pricing in a 100% likelihood that the Federal Reserve will start lowering borrowing costs at its upcoming policy meeting in September, with nearly a 70% probability of a 50-basis-point rate cut.
Thus, this heightened anticipation of Federal Reserve rate cuts has significantly boosted gold prices, as lower borrowing costs make non-yielding assets like gold more attractive to investors.
Geopolitical Tensions and Economic Concerns Drive Up Gold Prices
On the geopolitical front, rising tensions in the Middle East and worries about China's slowing economy are pushing gold prices higher. Hezbollah has been launching drones into Israel, which has led to retaliatory strikes and ongoing clashes. Hezbollah's leader, Sayyed Hassan Nasrallah, has promised revenge for Israeli attacks, while Iran has demanded action against Israel for allegedly killing a Hamas leader.
This is why, the conflict has extended beyond Gaza, causing significant casualties and worsening the humanitarian crisis. Despite efforts by the U.S. to mediate, fighting continues, increasing geopolitical risks. This uncertainty makes gold more attractive as a safe investment, driving up its price.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2394.590, reflecting a 0.48% increase. The 4-hour chart highlights a pivotal point at $2405.21.
Immediate resistance levels are set at $2431.41, $2452.64, and $2477.89. These levels could act as barriers if the price attempts to rise.
On the downside, immediate support is found at $2374.89, followed by $2353.65 and $2353.02.
The Relative Strength Index (RSI) is currently at 45, suggesting that gold is in a neutral zone, neither overbought nor oversold.
The 50-day Exponential Moving Average (EMA) stands at $2413.24, indicating that if the price stays below this level, bearish momentum may continue.
A move above the pivot point of $2405.21 could trigger further buying interest, but failure to break this level could result in selling pressure.
In conclusion, the technical indicators and key price levels suggest a cautious approach. The recommended strategy is to enter a sell limit order at $2405, with a take profit at $2375 and a stop loss at $2425.
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- AUD/USD Price Analysis – Aug 08, 2024
USD/JPY Price Analysis – Aug 08, 2024
Daily Price Outlook
During Thursday's European session, the USD/JPY currency pair continued its bearish trend, remaining under pressure near the 146.25 level and reaching an intra-day low of 145.43. This decline is primarily due to the strengthening of the Japanese Yen (JPY), which gained traction after the release of the Bank of Japan’s (BoJ) Summary of Opinions (SoP) from the July 30-31 meeting.
The SoP indicated that officials acknowledged the need for more rate hikes to address inflationary pressures driven by higher import prices. This acknowledgment bolstered the Yen, contributing to the downward movement of the USD/JPY pair. On the other side, the US dollar losing traction was another key factor keeping the USD/JPY pair lower.
Impact of Fed Rate Cut Expectations on USD and Its Effect on USD/JPY Pair
On the US front, the broad-based US Dollar (USD) has also been under pressure, exacerbating the bearish trend of the USD/JPY pair. However, the anticipation of significant rate cuts by the Federal Reserve (Fed) has been weighing on the USD. Investors are expecting that the Fed will soon implement substantial rate reductions to support economic growth, which diminishes the appeal of holding USD. This expectation contributes to the USD’s decline against the Yen.
Impact of BoJ’s Summary of Opinions on Japanese Yen Strength and Market Stability
On the flip side, the Japanese Yen's recent strengthening is directly linked to the BoJ’s latest Summary of Opinions. The BoJ's acknowledgment of the need for further rate hikes to curb inflation has bolstered investor confidence in the Yen. The prospect of higher interest rates in Japan supports the Yen by increasing its yield compared to the USD.
However, the BoJ’s stance also highlights potential market instability. BoJ Deputy Governor Shinichi Uchida’s statement that rate hikes would not be pursued during market instability underscores the cautious approach of the central bank.
Therefore, the Japanese Yen's strengthening, driven by anticipated BoJ rate hikes, and concerns about market instability have intensified the USD/JPY pair's bearish trend, leading to further declines in the USD.
USD/JPY - Technical Analysis
The USD/JPY pair is currently trading at $145.99, marking a 0.44% decline. The 4-hour chart indicates a pivotal point at $146.93.
Immediate resistance levels are identified at $148.54, $150.10, and $152.34, which could act as barriers to any upward movement.
On the downside, immediate support is found at $144.96, with further support at $143.69 and $141.79, offering potential stabilization points if the price continues to fall.
The Relative Strength Index (RSI) is at 45, suggesting that the pair is neither overbought nor oversold, but closer to the lower end of the spectrum.
The 50-day Exponential Moving Average (EMA) stands at $148.89, indicating bearish momentum as the price is below this level.
A move above the pivot point of $146.93 could signal a reversal, while staying below this level may reinforce the bearish outlook.
In light of the current technical indicators and key price levels, the recommended strategy is to enter a sell limit order at $146.932, with a take profit target at $144.024 and a stop loss at $148.498.
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AUD/USD Price Analysis – Aug 08, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6554 level, hitting an intra-day high of 0.6565. This upward trend can be attributed to Reserve Bank of Australia (RBA) Governor Michelle Bullock's hawkish guidance on interest rates, which supported the Australian dollar and contributed to the AUD/USD pair's gains.
Meanwhile, the US dollar losing traction was another key factor keeping the AUD/USD pair higher. However, market sentiment remains risk-averse due to fears of a potential global slowdown, which could cap gains in the AUD/USD pair as it undermines riskier assets, including the Australian dollar.
RBA's Hawkish Outlook Strengthens Australian Dollar and AUD/USD Pair
On the AUD front, the Australian dollar strengthened following Reserve Bank of Australia (RBA) Governor Michelle Bullock's hawkish outlook on interest rates. During a talk at the Rotary Club of Armidale, she emphasized that the RBA is prepared to increase the Official Cash Rate (OCR) to manage inflation risks.
Bullock also noted that inflation is unlikely to return to the target range of 2-3% before the end of 2025. Her comments show the RBA's strong commitment to controlling inflation, which boosted confidence in the Australian dollar and led to its increase in value.
She noted that the inflation rate is unlikely to return to the 2-3% target range before the end of 2025. This assertive stance on inflation and potential rate hikes bolstered the Australian dollar, reflecting increased confidence in the RBA's commitment to managing economic pressures.
Therefore, the hawkish stance by RBA Governor Bullock likely supports the Australian dollar, potentially strengthening the AUD/USD pair as markets anticipate further rate hikes and increased inflation vigilance.
US Dollar Pressure and Fed Rate Cut Speculation Boost AUD/USD
On the US front, the broad-based US dollar remained under pressure, struggling to gain traction amid softer economic data signaling a faster-than-expected slowdown in the world's largest economy. This has fueled speculation about larger interest rate cuts by the Federal Reserve, thereby supporting the non-yielding yellow metal, gold.
On the economic data front, government figures released on Tuesday showed that the US trade deficit narrowed by 2.5%, decreasing to $73.1 billion in June from $75.0 billion in May. This reduction was primarily driven by a 1.5% rise in exports, particularly in aircraft and US-produced oil and gas.
As a result, markets are now fully pricing in a 100% likelihood that the Federal Reserve will begin lowering borrowing costs at its upcoming policy meeting in September, with nearly a 70% probability of a 50-basis-point rate cut.
Therefore, the pressure on the US dollar and speculation about Fed rate cuts could strengthen the AUD/USD pair, as lower US interest rates may make the Australian dollar more attractive relative to the greenback.
AUD/USD - Technical Analysis
The AUD/USD pair is currently trading at $0.65553, reflecting a 0.57% increase on the day. On the 4-hour chart, the pivotal point to watch is $0.6511.
Immediate resistance levels are marked at $0.6576, $0.6610, and $0.6643, while support levels are positioned at $0.6475, $0.6436, and $0.6402. These levels are crucial in determining the pair's next move.
The Relative Strength Index (RSI) stands at 56, suggesting a moderately bullish sentiment. The 50-day Exponential Moving Average (EMA) is currently at $0.6523, indicating a slight upward trend.
If the price remains above the pivot point, it could signify continued bullish momentum. However, a fall below this level might shift the sentiment to bearish.
Given the current market conditions, a strategic entry at a buy limit order of $0.65235 is recommended, with a take profit target at $0.66096 and a stop loss at $0.64865.
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