Tag: Fundamental Analysis

  • Gold plunges 3% weekly as trade policies, recession fears fuel USD rally

    Gold plunges 3% weekly as trade policies, recession fears fuel USD rally


    • Gold drops over 1% Friday as USD strengthens, hitting 10-day high at 107.66.
    • XAU/USD falls to $2,845 as Fed rate-cut bets rise
    • Trump confirms 25% tariffs on Mexico and Canada, fueling market uncertainty.
    • Fed expected to cut rates by 70 bps in 2025 with first cut projected for June.

    Gold extended its losses on Friday, down more than 1% and over 3% in the week. The US Dollar rose to a ten-day peak of 107.66 amid fears of trade policies in the United States (US) and data that has sparked recessionary worries. The XAU/USD trades at $2,845 after reaching a daily peak of $2,885.

    According to US President Donald Trump, 25% tariffs on Mexican and Canadian products will be applied next week on March 4. The release of the Federal Reserve’s (Fed) preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, hinted that inflation continued progressing toward the 2% Fed goal.

    Expectations that the Fed would continue to ease policy rose after the data. According to Prime Market Terminal, the Fed will lower interest rates by 70 basis points this year with investors projecting the first rate cut in June.

    The Atlanta Fed GDPNow estimate has also been updated for Q1 2025. The model shows the economy will contract from a 2.3% expansion to -1.5 %. After the data, the 10-year US Treasury note yield dropped three basis points, and the US Dollar (USD) advanced on recession woes.

    In the meantime, some Fed speakers crossed the wires. The Cleveland Fed’s Beth Hammack said that a rate hike is not in the cards, and the impact of trade policies on monetary policy and the economy remains uncertain.

    Daily digest market movers: Gold price treads water as US recession looms

    • The core PCE in the US rose 0.3% MoM from December and increased 2.6% YoY, as estimated, down from December’s 2.8% increase.
    • The headline PCE jumped by 2.5% YoY as expected, dipping from 2.6%, and remained unchanged every month at 0.3%, as projected.
    • Meanwhile, traders continued to digest US President Donald Trump’s tariff rhetoric. He said 25% tariffs on Mexico and Canada would start next week, alongside an additional 10% on China.
    • The US 10-year Treasury note yield is at 4.229%, capping the Bullion price decline. US real yields, as measured by the yield in the US 10-year Treasury Inflation-Protected Securities (TIPS), edge lower five bps to 1.853%.
    • Last week, Goldman Sachs revised Gold price projections to $3,100 by the end of 2025.

    XAU/USD technical outlook: Gold extends losses beneath $2,850

    Gold price registers back-to-back bearish candles, a sign that traders are booking profits ahead of the weekend and squaring their portfolios at the end of the month. Once XAU/USD dropped below $2,900, it extended its fall toward $2,832, but a daily close above 2,850 would keep buyers hopeful for higher prices.

    In that outcome, XAU/USD first resistance would be the $2,900 mark, ahead of the year-to-date (YTD) high of $2,956. Otherwise, Gold’s first support would be $2,800, followed by the October 31 daily peak at $2,790 and by the 50-day Simple Moving Average (SMA) at $2,770.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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  • GBP/USD climbs as US Dollar weakens due to falling yields

    GBP/USD climbs as US Dollar weakens due to falling yields


    • Trump reiterates tariffs on Canada and Mexico, fueling trade concerns.
    • UK retailers slash investment as consumer spending weakens.
    • Markets expect BoE to hold rates at 4.50% in March, cut by Q2.

    The Pound Sterling (GBP) advanced early in the North American session, bouncing off a two-day low of 1.2605, as the Greenback weakened due to falling US Treasury yields. The GBP/USD pair trades at 1.2669, gaining 0.37%.

    Sterling bounces off 1.2605, gaining 0.37% amid sour market mood

    The market mood shifted sour amid US President Donald Trump’s threats of tariffs. On Monday, he reiterated that duties on Canadian and Mexican products would be enacted as planned. In the meantime, weaker-than-expected data from the United States (US) has begun to take its toll on the US Dollar (USD) and is also sending US Treasury bond yields plunging. The US 10-year Treasury note plummets 10 basis points (bps) to 4.30% at the time of writing.

    Data in the US revealed the S&P/Case-Shiller Home Prices for December rose by 4.5% YoY, up from November 4.3%. Ahead in the day, Fed Governor Michael Barr and Richmond Fed President Thomas Barkin would cross the wires.

    In the United Kingdom (UK), the Confederation of British Industry (CBI) revealed that British retailers plan to cut investment by the most in more than five years due to weak consumer spending and elevated prices.

    Recently, a Reuters poll revealed that 65 economists estimate the Bank of England (BoE) would keep rates unchanged at 4.50% in March and expect a cut to 4.25% in Q2.

    A day ago, Swati Dhingra, a BoE external member, said that the policy would still be restrictive even if the bank cut rates by 0.25% quarterly. Meanwhile, traders await BoE chief economist Huw Pill, who sits in the hawkish aisle of the BoE.

    Ahead of the day, traders will watch the Conference Board (CB) ‘s announcement of US Consumer Confidence.

    GBP/USD Price Forecast: Technical outlook

    GBP/USD is neutral to upward biased, exchanging hands above the 100-day Simple Moving Average (SMA) at 1.2648. A daily close above the latter could open the door to clear 1.2700, followed by the 200-day SMA at 1.2786. On the other hand, if GBP/USD struggles at 100-day SMA and drops below 1.2600, sellers could drive prices toward the February 5 peak turned support at 1.2549.

    British Pound PRICE Today

    The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   -0.36% -0.30% -0.49% 0.06% 0.19% 0.21% -0.43%
    EUR 0.36%   0.06% -0.11% 0.42% 0.56% 0.57% -0.07%
    GBP 0.30% -0.06%   -0.19% 0.36% 0.49% 0.51% -0.14%
    JPY 0.49% 0.11% 0.19%   0.54% 0.68% 0.68% 0.05%
    CAD -0.06% -0.42% -0.36% -0.54%   0.14% 0.15% -0.49%
    AUD -0.19% -0.56% -0.49% -0.68% -0.14%   0.01% -0.62%
    NZD -0.21% -0.57% -0.51% -0.68% -0.15% -0.01%   -0.64%
    CHF 0.43% 0.07% 0.14% -0.05% 0.49% 0.62% 0.64%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

     



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  • Gold plunges 3% weekly as trade policies, recession fears fuel USD rally

    Gold rally takes a breather, still heading for eight straight weekly advance


    • Gold touches all-time high of $2,954 amid trade policy uncertainty.
    • Trump expands tariffs to lumber and soft commodities, adding market jitters.
    • US data mixed: Manufacturing PMI improves, but Services PMI contracts.

    Gold price slides late on Friday, poised to end the week positively, accumulating eight straight weeks of gains that pushed the yellow metal to all-time highs of $2,954. At the time of writing, the XAU/USD trades at $2,940, down 0.15%.

    The financial markets’ narrative has not changed as US President Donald Trump continues with rhetoric related to tariffs. In addition to imposing 25% tariffs on cars, pharmaceuticals and chips, Trump broadened duties to lumber and other soft commodities.

    This fueled the rally in Bullion prices as investors seeking safety drove prices higher amidst uncertainty about US trade policies. Meanwhile, geopolitics took a second stage as there was some progress in the discussion to end the Russia-Ukraine war, which relieved the markets.

    Data-wise, business activity in the United States was mixed. The manufacturing PMI improved. Conversely, the Services PMI plunged for the first time since January 2023.

    Other data showed that Existing Home Sales plunged, and the University of Michigan (UoM) Consumer Sentiment Final reading for February deteriorated further.

    Daily digest market movers: Gold price fails to capitalize on US yields drop

    • The US 10-year Treasury bond yield falls nine basis points (bps) and yields 4.416%.

    • US real yields, which correlate inversely to Bullion prices, drop four basis points to 1.996%, a tailwind for Bullion prices.
    • US S&P Global revealed the Manufacturing PMI in February expanded by 51.6, up from 51.2, exceeding forecasts. The Services PMI plummeted from 52.9 to 49.7.
    • The University of Michigan Consumer Sentiment Index in February dipped from 71.1 to 64.7. American consumers’ inflation expectations for one year rose from 3.3% to 4.3% as foreseen, and for a five-year period, they are anchored at 3.5%, up from 3.2% revealed in the previous month.
    • The Federal Reserve’s Meeting Minutes from Wednesday revealed that Trump’s trade and immigration policies fueled concerns over rising prices.
    • The World Gold Council revealed that central bank purchases rose more than 54% YoY to 333 tonnes following Trump’s victory.
    • Money market fed funds futures are pricing in 50 basis points of easing by the Fed in 2025.

    XAU/USD technical outlook: Gold price faces resistance and retreats

    Gold price remains upwardly biased, yet the trend seems exhausted. The Relative Strength Index (RSI) suggests that buyers are losing ground with the RSI’s exiting from overbought territory opening the door for a retracement in Bullion prices.

    The first key support area to look at is $2,900. Once surpassed, sellers would target the February 14 swing low of $2,877, followed by the February 12 daily low of $2,864. Conversely, if XAU/USD rises past $2,954, the first resistance would be the psychological $2,950, followed by $3,000.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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  • Mexican Peso extends rally to six days amid lack of catalyst

    Mexican Peso extends rally to six days amid lack of catalyst


    • USD/MXN dips below 50-day SMA at 20.42, trading at 20.27.
    • Weak US Retail Sales and softer PPI sub-components fuel Fed easing expectations.
    • Mexico’s Retail Sales, Banxico minutes, and Q4 GDP are in focus this week.

    The Mexican Peso (MXN) extended its gains versus the US Dollar (USD), clearing key support at the 50-day Simple Moving Average (SMA) of 20.42 as the USD/MXN found acceptance at lower exchange rates. At the time of writing, the exotic pair trades at 20.27, down 0.09%.

    Last week’s worse-than-expected United States (US) Retail Sales report drove the USD/MXN pair lower amid the uncertainty about economic growth in the US.

    Although US consumer inflation data surged, some sub-components of the Producer Price Index (PPI) used to calculate the Federal Reserve’s (Fed) preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, suggests that prices could aim lower, increasing the chances for Fed’s easing.

    After Friday’s data, figures from the Chicago Board of Trade (CBOT) suggest that investors had priced in 43 basis points (bps) of easing.

    Despite this, the Philadelphia Fed President Patrick Harker stated that the current state of the economy justifies maintaining a steady rate policy, noting that monetary policy is well-positioned now. He acknowledged that inflation has remained elevated and persistent in recent months, emphasizing that the Fed’s policy stance should continue to work towards lowering inflation.

    Ahead of this week, Mexico’s economic docket will feature Retail Sales for December, the release of Banco de Mexico (Banxico) latest meeting minutes, and Gross Domestic Product (GDP) figures for Q4 2024.

    Daily digest market movers: Mexican Peso climbs despite Banxico’s dovish stance

    • Monetary policy divergence between Banxico and the Fed favors further USD/MXN upside, as the Fed would likely hold rates for a longer period, while Banxico is expected to cut rates again by  50 basis points in the next meeting.
    • The US Dollar Index (DXY), which tracks the buck’s performance against a basket of currencies, is virtually unchanged at 106.77, a headwind for USD/MXN.
    • Trade disputes between the US and Mexico remain in the boiler room. Although the countries found common ground previously, USD/MXN traders should know that there is a  30-day pause and that tensions could arise toward the end of February.

    USD/MXN technical outlook: Mexican Peso surges as USD/MXN drops below 50-day SMA

    USD/MXN trends lower on Monday and close into the 100-day SMA at 20.24, which, if cleared, could open the door for further downside. The Relative Strength Index (RSI) turned bearish, which indicated that the exotic pair could be headed to the 20.00 psychological figure.

    In that outcome, if sellers push prices below 20.00, the next support would be the October 18 swing low at 19.64, followed by the 200-day SMA at 19.37.

    Conversely, if USD/MXN rises back above the 50-day SMA, the next resistance would be 20.50, followed by the January 17 high of 20.90, the 21.00 figure, and the year-to-date (YTD) high of 21.29.

    Risk sentiment FAQs

    In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.

    Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

    The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.

    The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.

     



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  • Mexican Peso extends rally to six days amid lack of catalyst

    Mexican Peso on the backfoot following Banxico’s Rodriguez remarks


    • Mexican Peso weighed down by steek and aluminum tariffs enacted by The White House.
    • Mexican automobile production and exports declined, creating a headwind for the emerging market currency.
    • USD/MXN traders eye testimony from Fed Chair Jerome Powell on Tuesday.

    The Mexican Peso depreciated against the US Dollar on Monday after US President Donald Trump decided to apply 25% tariffs on aluminum and steel imports into the United States (US), including Mexico and Canada. At the time of writing, the USD/MXN trades at 20.67, a gain of 0.66%.

    On Sunday, Trump stated that he would apply tariffs on base metals. He added that reciprocal tariffs could be enacted as soon as Tuesday or Wednesday and that the tariffs would address the deficit.

    The USD/MXN jumped on those remarks, extending its gains during the North American session. Meanwhile, the market mood remained upbeat, as depicted by US equities trading with gains.

    Mexican data revealed that auto production dipped and exports plummeted for the third consecutive month in January, according to the Instituto Nacional de Estadistica Geografia e Informatica (INEGI).

    Earlier, Banxico Governor Victoria Rodriguez Ceja was dovish, revealing that the Central Bank could cut rates of the same magnitude as in February, adding that the job of bringing inflation to the 3% goal has not concluded.

    Mexican Industrial Production for December is expected to remain unchanged at 0.1% MoM. US Federal Reserve (Fed) Chair Jerome Powell will cross the wires in the US for his semi-annual testimony at the US Congress. US inflation data on the consumer and producer side and retail sales will also update the status of the US economy.

    Daily digest market movers: Mexican data failed to cap Peso’s fall spurred by Trump’s rhetoric

    • Mexico’s Auto Exports plunged from -5.8% YoY to -13.7% in January. Production dipped from 4.2% to 1.7% YoY.
    • Banxico’s Rodriguez added that Mexico’s role in US production chains allowed American consumers access to products at competitive prices. She said the central bank remains attentive to what might happen in March after the 30-day grace period provided by Trump.
    • She added that despite being volatile, the Mexican Peso market has operated in an orderly way.
    • The New York Fed Survey of Consumer Expectations revealed that US consumers expect inflation to remain at 3%. For five years, prices are expected to edge up from 2.7% to 3% in December.
    • Trade disputes between the US and Mexico remain in the boiler room. Although the countries found common ground previously, USD/MXN traders should know that there is a 30-day pause and that tensions could arise toward the end of February.
    • Money market fed funds rate futures are pricing in 39 basis points (bps) of easing by the Fed in 2025.

    USD/MXN technical outlook: Mexican Peso poised for further losses

    The USD/MXN uptrend remains in place, but the exotic pair could remain sideways in the short term, trading within the 20.30 – 20.70 area. Momentum remains bullish, as depicted by the Relative Strength Index (RSI), but buyers need to push prices above 20.70, so they could target higher prices.

    The next resistance would be the January 17 daily peak at 20.90 before testing the 21.00 figure and the year-to-date (YTD) high at 21.29. Conversely, a drop below the 50-day Simple Moving average (SMA) at 20.57 could clear the path toward the 100-day SMA at 20.22. On further weakness, look for a test of 20.00.

    Economic Indicator

    Central Bank Interest Rate

    The Bank of Mexico announces a key interest rate which affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers.  Generally speaking, if the central bank is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the Mexican Peso.

    Read more.

    Last release: Thu Feb 06, 2025 19:00

    Frequency: Irregular

    Actual: 9.5%

    Consensus: 9.5%

    Previous: 10%

    Source: Banxico

     



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  • USD/JPY steady amid tariff threats ahead of BoJ’s meeting

    USD/JPY steady amid tariff threats ahead of BoJ’s meeting


    • USD/JPY stable despite volatility after Trump announces possible 25% tariffs on neighboring countries.
    • US Dollar Index (DXY) gains 0.29%, reaching 108.30, amid positive market sentiment.
    • Focus on upcoming Bank of Japan meeting; potential for 25 basis point rate hike expected.

    The USD/JPY was virtually unchanged during the North American session on Tuesday, as traders assessed US President Donald Trump’s threats to impose 25% tariffs on Canada and Mexico as soon as February 1. The Greenback recovered as the major hit a daily high of 156.20. However, fears faded as the pair traded near 155.54, virtually unchanged.

    USD/JPY consolidates near 155.50 on President Trump’s proposed tariffs on Canada and Mexico

    Market sentiment remains upbeat, and the US Dollar climbs, as depicted by the US Dollar Index (DXY), which tracks the basket of six currencies against the buck, rising 0.29% to 108.30.

    Meanwhile, traders in the FX markets would continue to be attentive to Trump’s rhetoric, which sent ripples late Monday in the US as he signed a tranche of executive orders, including illegal immigration and naming cartels as global terrorist organizations.

    In addition, USD/JPY traders are focused on the Bank of Japan’s (BoJ) next monetary policy meeting. Interest rate probabilities suggest the BoJ would likely raise rates by 25 basis points to 0.50% for the first time since July last year.

    Source: Prime Market Terminal

    This week, the US economic schedule remains absent until Thursday, when the Initial Jobless Claims data will be released, followed by Friday’s S&P Flash PMIs. In Japan, the docket will feature Trade Balance data and foreign Investment figures ahead of the BoJ meeting.

    USD/JPY Price Forecast: Technical outlook

    The USD/JPY uptrend remains intact, but recently, sellers stepped in and dragged spot prices from around 158.80 to the current level. Despite this, bears failed to clear a support trendline drawn from September 2024 lows near 154.50. Nevertheless, if USD/JPY holds below 156.00, further downside is seen once 155.00 is cleared. The next support would be the 154.50, followed by the 154.00 mark.

    On the other hand, if USD/JPY rises past the Senkou-span A at 156.41, a test of 157.00 is on the cards. If surpassed, a jump toward the January 15 high of 158.03 is likely.

    Japanese Yen PRICE Today

    The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   0.25% 0.30% -0.06% 0.56% 0.33% 0.45% 0.20%
    EUR -0.25%   0.06% -0.24% 0.30% 0.08% 0.21% -0.07%
    GBP -0.30% -0.06%   -0.34% 0.24% 0.01% 0.14% -0.12%
    JPY 0.06% 0.24% 0.34%   0.61% 0.37% 0.48% 0.23%
    CAD -0.56% -0.30% -0.24% -0.61%   -0.23% -0.10% -0.37%
    AUD -0.33% -0.08% -0.01% -0.37% 0.23%   0.12% -0.14%
    NZD -0.45% -0.21% -0.14% -0.48% 0.10% -0.12%   -0.27%
    CHF -0.20% 0.07% 0.12% -0.23% 0.37% 0.14% 0.27%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).



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  • Gold plunges 3% weekly as trade policies, recession fears fuel USD rally

    Gold prices dip in face of strengthening US Dollar


    • Gold slightly down in late trading, still up 0.40% for the week amid geopolitical tensions.
    • Mixed US economic data; higher Housing Starts, lower Building Permits minimally impact Bullion.
    • Fed Governor Waller’s dovish comments suggest potential for early rate cuts.

    Gold’s price dropped late in the North American session, but it is set to finish the week with gains of over 0.40% as market players await the inauguration of US President-elect Donald Trump. Although the XAU/USD trades at $2,701, down 0.44%, investors continued to buy the golden metal due to political uncertainty.

    The precious metal continues to be driven by geopolitics and politics in the United States (US). Although US Treasury bond yields in the belly of the curve remained unchanged, Bullion buyers failed to push prices higher to book additional gains ahead of the weekend.

    The US economic schedule showed that Housing Starts jumped double digits, though Building Permits contracted in December. Gold barely reacted to the news, as most of the data revealed during the week, led by Retail Sales featured on Thursday, suggest the economy is solid.

    The US Dollar Index (DXY), which tracks the USD’s performance against a basket of six peers, surged 0.35% to 109.34.

    Other data revealed during the Asian session showed that China’s economy hit a 5% Gross Domestic Product (GDP) growth rate in 2024, according to the National Bureau of Statistics.

    On Thursday, Fed Governor Christopher Waller tilted dovish and commented that the US central bank could lower borrowing costs sooner and faster if the disinflation process evolves.

    Market participants are pricing in near-even odds that the Fed will cut rates twice by the end of 2025 and see the first reduction in June.

    Source: Prime Market Terminal

    Next week, the US economic docket will feature the US Presidential Inauguration, the release of Initial Jobless Claims and Flash PMIs data.

    Daily digest market movers: Gold price pressured ahead of the weekend

    • Gold fell as real yields remained firm on Friday. Measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, was virtually unchanged at 2.18%.
    • The US 10-year Treasury bond yield was unchanged at 4.618%, a headwind for the golden metal.
    • US Housing Starts jumped from 1.294 million to 1.499 million in December, a jump of 15.8% MoM.
    • Building Permits for the same period shrank as permits dipped from 1.493 million to 1.483 million, a 0.7% drop.
    • The latest inflation data and Fed Waller’s comments pressured the US Dollar, as traders had grown confident the Fed would cut rates sooner rather than later. Waller didn’t rule out a cut in the March meeting as inflation “is getting close to what our 2% inflation target would be.”

    XAU/USD technical outlook: Gold hold firm near $2,700

    Gold prices fell amid the lack of catalysts ahead of the weekend. Nonetheless, buyers must keep XAU/USD’s prices above $2,700, so they can remain hopeful of pushing the yellow metal toward the December 12 high of $2,726. Once surpassed, the next stop would be $2,750, followed by the all-time high at $2,790.

    On the other hand, buyers’ failure to achieve the previously mentioned outcome could mean Gold might test the January 13 swing low of $2,656, followed by the confluence of the 50 and 100-day Simple Moving Averages (SMAs) at $2,639 – $2,642.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.



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  • Gold soars unfazed by strong US jobs data ahead of CPI

    Gold soars unfazed by strong US jobs data ahead of CPI


    • Gold rebounds 0.69% despite significant US job additions, challenging Fed’s rate cut path.
    • Gold recovers from post-labor report drop as investors weigh Fed’s cautious disinflation stance.
    • Upcoming US inflation and retail sales data set to influence gold’s trajectory, Fed policy.

    Gold price rebounded off daily lows on Friday, extending its rally for the fourth consecutive day as traders shrugged off a strong United States (US) Nonfarm Payrolls report. This tempered the Federal Reserve’s (Fed) concerns about the labor market, but not so much inflation as some officials acknowledged. The XAU/USD trades at $2,687, up 0.69%.

    Bullion fell sharply after the US Bureau of Labor Statistics (BLS) revealed that the economy added an outstanding number of people to the workforce, topping 200K. As a consequence, the Unemployment Rate dipped, while investors priced in fewer interest rate cuts based on the fact that the economy continues to create enough jobs, while the disinflation process “halted,” according to the Fed’s latest minutes.

    Nevertheless, XAU/USD recovered once market participants digested the data. The data reassured Fed officials that the labor market remains healthy while they tackle inflation, which recently edged higher after the US central bank lowered rates by 100 basis points in 2024.

    The US Dollar rose sharply to multi-month highs according to the US Dollar Index (DXY). The DXY hit 109.96 before trimming gains and is at 109.68, up 0.49%. US Treasury bond yields soared, yet had stabilized, particularly the belly of the curve.

    Chicago Fed President Austan Goolsbee said they don’t complain because the economy has created over 250K jobs. He added that the jobs market seems stable “at full employment,” adding that if conditions are stable and there’s no rise in inflation, “rates should go down.”

    Given the backdrop, investor focus will shift to next week’s data. The US schedule will feature inflation figures on the producer and consumer side, alongside Retail Sales and jobless claims for the week ending January 11.

    Daily digest market movers: Gold price surges accompanied by the US Dollar

    • Gold price shrugs off higher US real yields, which rose by two bps to 2.30%. At the same time, the US 10-year T-note yield soared seven and a half bps to 4.767%.
    • The US Bureau of Labor Statistics (BLS) revealed that the economy created 256K jobs last month, although November was revised downward from 227K to 212K. The consensus projected 160K people to be added to the workforce, with private hiring totaling 223K.
    • The Unemployment Rate fell to 4.1%, while Average Hourly Earnings (AHE) dipped from 4% to 3.9%. Following the data release, traders expect the Federal Reserve to cut rates just once in 2025.
    • Easing expectations of the Federal Reserve continued to edge lower. The December Fed funds futures contract is pricing in 30 basis points of easing.
    • US Consumer Sentiment in January announced by the University of Michigan (UoM) missed estimates of 73.8 and was down to 73.2. Inflation expectations for one year rose by 3.3% up from 2.8% and for a five-year period increased from 3% to 3.3%.
    • On Thursday, Fed Governor Michelle Bowman maintained a hawkish stance, saying the central bank should be cautious in adjusting interest rates, while Kansas City Fed Jeffrey Schmid added that rates are “near” neutral.
    • Earlier, Philadelphia Fed Patrick Harker revealed that the US central bank could pause amid uncertainty, while Boston Fed Susan Collins said the current outlook suggests a gradual approach to rate cuts.

    XAU/USD technical outlook: Gold price soars above $2,650 as bulls stepped in

    Gold’s uptrend remains in place as the yellow metal has carved successive series of higher highs and higher lows, with traders eyeing the $2,700 mark. Momentum is strongly tilted to the upside as seen on the Relative Strength Index (RSI) indicator, which shows bulls are in charge.

    If XAU/USD clears $2,700, the next resistance would be the December 12 high of $2,726 and the all-time high (ATH) at $2,790.

    Conversely, a drop below $2,650 will put into play a challenge of the 50 and 100-day Simple Moving Averages (SMAs) at $2,645 and $2,632 respectively. On further weakness, $2,600 is up next, ahead of the 200-day SMA at $2,503.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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  • Gold surge stalls after JOLTs data, FOMC minutes awaited


    • Gold climbs to $2,664 but faces pressure from a strong US labor market and Trump’s assertive tariff plans.
    • Trump’s unexpected remarks on reclaiming the Panama Canal and imposing tariffs on neighbors bolster the US Dollar.
    • People’s Bank of China boosts gold reserves, signaling increased demand as global economic uncertainties persist.

    Gold price advanced late in the North American session on Tuesday yet retreated from daily highs on solid United States (US) economic data and US President-elect Donald Trump’s press conference remarks. The XAU/USD trades at $2,648, gains 0.50%.

    In the United States, the schedule revealed a strong jobs report amid an increase in job openings, reassuring investors that the labor market is solid. Furthermore, business activity in the services sector improved sharply, weighing on expectations for further easing by the Federal Reserve (Fed).

    In the meantime, US President-elect Donald Trump crossed the wires, said he would like to take back control of the Panama Canal and reiterated that he would impose tariffs on Canada and Mexico. This boosted the US Dollar (USD) and capped Gold’s advance.

    Earlier, Bullion rose to a two-day peak of $2,664 after China’s central bank increased its Gold reserves for the second straight month by 300K ounces to 73.3 million, an indication that the People’s Bank of China (PBoC) resumed its purchases after a six-month pause.

    US Treasury bond yields remained high, bolstering the Greenback. According to the Fed funds futures interest rate contract at the Chicago Board of Trade (CBOT), investors estimate 51 basis points (bps) of easing or two 25 bps interest rate cuts by the Fed toward the end of the year.

    Ahead this week, the US economic docket will feature the ADP Employment Change, Initial Jobless Claims figures, the Fed’s last meeting minutes and December’s US Nonfarm Payrolls report.

    Daily digest market movers: Gold price climbs amid high US yields, underpinned by PBoC purchases

    • Gold remains pressured as US real yields rise two bps up to 2.28%.
    • The US 10-year T-note yield soars six and a half bps to 4.691%.
    • The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, edges up by 0.26% at 108.55 after bouncing from a weekly low of 107.75.
    • The ISM Services PMI in December increased by 54.1, exceeding forecasts of 53.3 and November’s 52.1 reading.
    • The Job Labor and Turnover Survey (JOLTS) revealed that work openings increased from 7.839 million to 8.098 million in November.
    • The US trade deficit widened in November, according to the US BEA, reaching $78.2 billion compared to $73.6 billion in October.
    • Imports climbed by 3.4% MoM to $351.6 billion from $339.9 billion, while exports increased by 2.7%MoM to $273.4 billion from $266.3 billion.

    XAU/USD technical outlook: Gold price advances but remains below $2,650

    Gold prices have advanced above $2,640, opening the door to exchange hands at around the $2,640 – $2,650 range. Nonetheless, the yellow metal cannot decisively clear the 50-day Simple Moving Average (SMA) at around $2,651, which could pave the way for further upside.

    In that outcome, the next ceiling level would be $2,700 ahead of challenging the December 12 peak at $2,726. If surpassed, the next stop would be the record high at $2,790.

    Conversely, if sellers drag the XAU/USD below the 100-day SMA of $2,627, look for a test of $2,500 before Gold extends its losses to the 200-day SMA at $2,494.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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