Articles Tagged with: gold

Forex Week Ahead – November 18 2024, Navigating Economic Signals Amidst Dollar Dominance

Key Insights

​The Forex market is set for significant developments next week as the US dollar gains strength driven by economic data and Fed expectations.​ Key events include the upcoming UK CPI and housing data from the US, both crucial for determining monetary policy directions. Traders should focus on these releases to position themselves advantageously.

Market Overview

As we enter the week of November 18, 2024, the Forex market continues to grapple with a mix of economic signals and geopolitical factors that are influencing trader sentiment and currency valuations. The US dollar has shown remarkable resilience, largely due to a robust inflation report suggesting persistent price pressures. This backdrop is compounded by a mixed outlook on Federal Reserve rate cuts, with market expectations tightening following the latest economic indicators.

Last week, the stock market faced significant declines, notably the S&P 500 and Nasdaq, as the dollar regained its dominance amidst fears of a slower economic recovery under potential new policies from the Trump administration. Bitcoin surged to a record high above $92,000, reflecting investor sentiment towards decentralized currencies in uncertain economic times.

Next week, critical data releases such as the UK Consumer Price Index (CPI) and US housing market statistics will further shape the market landscape. These reports are anticipated to provide insights into inflation trends and housing sector health, pivotal in shaping central bank policies and market reactions.

Currencies Summary

🇺🇸 US Dollar (USD)

Recent data has shown stronger-than-expected inflation, leading to a rise in the dollar’s value as market participants recalibrate their expectations of Fed rate cuts. This week’s upcoming housing data may reveal vulnerabilities in the housing market, critical for consumer spending trends and inflation forecasts—key for traders to reassess their positions.

🇬🇧 British Pound (GBP)

The latest UK CPI data indicates an upward trend in inflation, which could affect the Bank of England’s strategy moving forward. Traders should closely watch the CPI release next week, as it will provide insights into the UK’s economic health and influence GBP valuations against the dollar and euro.

🇪🇺 Euro (EUR)

The Eurozone is set to release the November PMI surveys, essential for evaluating economic momentum in Europe. Previous stable inflation data has temporarily boosted sentiment, but the PMI results will be influential in determining market expectations for ECB policies and the euro’s strength relative to the USD.

💹 Bitcoin (BTC)

Bitcoin’s surge past $92,000 highlights its growing appeal as a decentralized currency during periods of economic uncertainty. Upcoming economic data releases could impact Bitcoin’s price dynamics as traders seek to identify correlations with traditional market movements, illuminating potential trading strategies in this volatile space.

Upcoming Economic Calendar

The upcoming economic calendar is critical for Forex market participants, with key events such as US housing data and the UK CPI anticipated to drive significant price movements. Housing data could indicate signs of weakness in the sector, potentially influencing Fed policies regarding rate adjustments. Additionally, the UK CPI release will shed light on inflation trends that could impact the Bank of England’s decisions in a pivotal phase for GBP valuation. These indicators are crucial for traders to inform their strategies and manage risk effectively in a shifting economic landscape.

Conclusion

The Forex market is poised for a week filled with pivotal economic indicators and decisions from central banks. The interplay between US monetary policy signals and inflation developments in the UK will be significant in determining currency valuations and trader sentiment. Staying informed about these dynamics will be crucial for traders seeking to navigate the challenges and opportunities within the market effectively.

Week Ahead: Navigating the Forex Market Post-Election and Inflation Data (November 2024)

Key Insights

The Forex market enters the coming week with heightened volatility following key developments, including the US elections and crucial economic data releases. Traders should remain vigilant as upcoming data such as the US Consumer Price Index (CPI) and other indicators may drive market sentiment and valuations significantly.

Market Overview

In the past week, the Forex market experienced considerable movement influenced by the outcome of the US presidential election, where the results hinted at potential shifts in economic policies. Immediately following the election, the US Dollar saw fluctuations as traders speculated on the implications of a new administration focused on tackling inflation. The Federal Reserve’s recent rate cut added to the uncertainty, further impacting the USD’s strength against major currencies.

Crucial economic data is set for release next week, particularly the US CPI report, which is expected to show an increase to 2.6% for October, up from 2.4%. Such data is vital as persistent inflation would compel the Federal Reserve to adjust its policy stance more aggressively, potentially impacting the USD.

The upcoming week also features other economic releases that could affect Forex trading, such as employment figures and trade balances across the G10 currencies. These releases will be closely monitored by traders looking to gauge the global economic outlook and its tangible effects on currency valuations.

Currencies Summary

Currencies Summary

🇺🇸 USD: The US Dollar fluctuated following the elections; inflation data release next week will likely determine the USD’s trajectory.

🇪🇺 EUR: The Euro faced pressure as economic sentiment indicators failed to meet expectations; upcoming Eurozone data may influence its movements against the USD.

🇦🇺 AUD: The Australian Dollar initially gained ground due to strong commodity prices but faces uncertainty surrounding upcoming economic releases from China affecting trade dynamics.

🇬🇧 GBP: The Pound remains range-bound but could strengthen if UK economic data indicates robust recovery; traders should watch for inflation reports impacting monetary policy expectations.

🇨🇦 CAD: The Canadian Dollar’s outlook fluctuates following dovish statements from the Bank of Canada; upcoming inflation data is crucial for Canadian markets.

Upcoming Economic Calendar

Next week presents critical events for Forex traders, including the highly anticipated US CPI, which plays a pivotal role in determining inflationary trends and the Federal Reserve’s monetary policy direction. Additionally, events such as the ISM Services PMI and employment figures provide vital context for understanding economic health. Monitoring these reports will help traders adjust their strategies in alignment with the anticipated market volatility and influence on currency pairs.

Conclusion

​The upcoming week is poised to be crucial for Forex traders as economic data releases, particularly inflation-related reports, will significantly influence market sentiment.​ Stakeholders are advised to be proactive in their analysis, using the economic calendar to strategize effectively and navigate potential volatility in the Forex market.

Week Ahead, Upcoming U.S. Election and Central Bank Decisions

Key Insights

The upcoming week holds significant potential for volatility in the Forex market, driven primarily by the U.S. presidential election and critical economic data releases from several major currencies. Traders should be vigilant as these events could lead to substantial price movements and provide trading opportunities.

Market Overview

The Forex market enters the week of November 4, 2024, with heightened uncertainty, primarily due to the U.S. presidential election scheduled for November 5. This event is expected to influence not only the U.S. Dollar (USD) but also global market sentiment as investors speculate on the possible outcomes. Historically, presidential elections in the U.S. have led to notable currency fluctuations. The market anticipates a close race between former President Donald Trump and current Vice President Kamala Harris, which could result in divergent fiscal and trade policy directions, directly impacting USD valuation.

In addition to the election, the Federal Reserve’s anticipated interest rate cut of 0.25% is causing waves across the market, with traders adjusting positions ahead of this crucial policy meeting on November 7. Recent economic data releases, including below-expected job additions and fluctuating inflation indicators, have already influenced market behavior, setting the stage for further volatility. The market’s response to these multi-faceted events will be closely monitored, as they will directly impact trading strategies moving forward.

Currencies Summary

🇺🇸 US Dollar (USD): Last week, the USD faced a mixed performance, appreciating slightly ahead of the election and due to recent economic data suggesting persistent inflationary pressures. The market’s attention was drawn to the weaker-than-expected October Nonfarm Payrolls report, which reported only 113,000 jobs added, significantly below the anticipated 250,000. This data created apprehensions regarding economic growth, leading to speculation over the upcoming Fed rate cut, expected to bring the rate down to 4.75%. Looking ahead to this week, traders should focus on the election results and the Fed’s commentary post-rate decision, as these events will significantly shape market sentiment and potential price actions.

🇦🇺 Australian Dollar (AUD): The Aussie experienced downward pressure last week as the Reserve Bank of Australia (RBA) maintained its cash rate at 4.35%. This decision came amid mixed economic data reflecting sluggish wage growth and a cooling labor market. The AUD’s performance is expected to be influenced by its correlation with commodity prices and ongoing developments in global markets. This week, traders should pay attention to RBA commentary and any potential changes in monetary policy which could suggest future currency strength or weakness.

🇬🇧 British Pound (GBP): The GBP has been volatile, recently weakened by apprehensive market sentiment regarding the Bank of England’s interest rate decisions, which are set to be discussed on November 7. Concerns surrounding the UK’s inflation outlook have fueled speculation around potential rate cuts, which could further weaken the pound. The upcoming BoE meeting and subsequent policy report are critical for GBP traders as they will highlight the central bank’s stance amid economic challenges.

🇨🇦 Canadian Dollar (CAD): Over the past week, the CAD exhibited strength against a backdrop of rising crude oil prices, but it remains susceptible to fluctuations driven by U.S. data and the election. The upcoming week will feature crucial Canadian labor market data that could provide insights into domestic economic health and influence CAD valuation depending on the outcomes.

🇨🇳 Chinese Yuan (CNY): Recent data showed improvement in China’s manufacturing sector with the Caixin Manufacturing PMI coming in at 50.4, which is slightly above market expectations. This positivity provides some support for the yuan, but with the release of upcoming macroeconomic data, including Producer Price Index (PPI) and Trade Balance, volatility is expected, contingent on how these figures oppose market forecasts

Upcoming Economic Calendar

The economic calendar for the week starting November 4 is packed with high-impact events that could shake the markets. The focal point will undoubtedly be the U.S. presidential elections on November 5, closely followed by the Federal Reserve’s rate decision on November 7, where a rate reduction is widely anticipated. On the same day, Canada will release its employment data, which could affect the CAD’s trajectory. Additionally, the Reserve Bank of Australia is set to announce its interest rate decision, which may have significant ramifications for the AUD. Currency traders should also keep an eye on consumer confidence indices and other inflation-related releases that may provide insights into the economic outlook.

Conclusion

​The upcoming week in the Forex market is set to be pivotal, characterized by the U.S.​ presidential election and significant economic data releases that will likely affect trading conditions. With the potential for considerable volatility, traders are advised to adopt caution, analyze the data critically, and keenly watch for indications of how these events will shape currency value trajectories. Understanding these dynamics will be crucial for formulating trading strategies in this complex market landscape.

Gold Analysis – December 4, 2023

Fundamental View

The fundamental outlook for gold suggests a mix of factors influencing its trajectory. Analysts predict a bullish trend, with forecasts ranging from $1,800 to $2,060 per ounce in 2023, and a continued upward trend in 2024. However, challenges like waning demand, driven by rising real rates and a stronger US dollar, persist, undermining gold’s strength. Gold is influenced by fluctuations in the US dollar and yields. The rise of gold by 14% from November 2022 to early February 2023 was supported by a less hawkish tone from the US Federal Reserve.

The significant activity of buying gold by central banks with the net purchase of 800 tons of gold last year has been the main factor behind the positive performance of gold. In the absence of a clear catalyst, the increase in the price of gold on the day may be due to the execution of profit limits of long positions. In this case, we can have the possibility of a short-term retreat in the price of gold.

Latest Gold’s Rally

Gold crossed its August 2020 high due to expectations of a US interest rate cut and the cautious stance of the Federal Reserve. The Fed’s comments fueled the gold rally. Gold prices were further boosted by Federal Reserve Chairman Powell’s comments on the restrictive monetary policy stance. The comment led to a decrease in yields and the US dollar, favoring the rise of gold.

There is always FED in between

Amid speculation of impending interest rate cuts, Powell cautioned against premature expectations. This led to a cautious market, with gold prices reflecting a hesitancy to react to signs of the Federal Reserve delaying rate cuts.

Market Sentiment and Influencing Factors

Gold prices fell today from Monday’s highs, perhaps reflecting the market’s reaction to signs that the Federal Reserve is in no rush to cut rates.
This sentiment was reflected in the Treasury market as the 10-year yield rose. The upcoming US labor force data, which is expected to show rising wages and Iran’s steady unemployment rate, could weigh on gold trends.

📅 Economic Calendar

Technical View

The medium-term outlook for gold looks upbeat, however, the potential for real rates to rise in the face of deflation may weigh on gold investments, while net long positions have increased. ETF holdings have not risen significantly, reflecting mixed sentiment. It is in the gold market.

Any talk and possibility of an interest rate hike by the Federal Reserve can bring the price of gold back to the 1850 area, and if the expectations of an increase in interest rates by the Federal Reserve continue to increase as in the past weeks, the price of gold will be above 50-20.

Our direction for gold remains bullish and dips can be bought. Significant levels for a buy scenario are the 2035 levels.

Long depended on Fed expectation by Alisabbaghi on TradingView.com

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Weekly gold Analysis

Fundamental View

Gold has been unappealing to buyers for three weeks. Strong economic data and high inflation led to a drop in gold prices. For the third consecutive week, the price per ounce of gold fell, leading to renewed discussions of a June rate hike. This shift in interest rate projections is the primary explanation for the decrease in gold’s value.

The inflation growth rate has not decreased yet!

Macroeconomic data was the main driver of the market. The durable goods index, consumer spending, and US PCE inflation all exceeded projections. US Federal Reserve emphasized the PCE index, which peaked at 4.7% in April. The near 5% US inflation merits ongoing interest rate adjustments. 0.25% hike anticipated by investors.

The US dollar strengthened

While the ounce of gold is down, the US dollar is up. According to analysts, the gold ounce will likely be under pressure until the beginning of the third quarter of 2023 due to strengthening interest rate expectations. Meanwhile, the only debt crisis of the US federal government can support the gold ounce. Negotiations on raising the federal government’s debt ceiling are ongoing and have yet to come to a conclusion.

📅 Economic Calendar

Technical View

It is still too early to talk about the formation of a price floor in the market. It is true that an ounce of gold has dropped from its historical peak of $125, but there is still no news of a price floor. It seems that the fair price of an ounce of gold is in the range of 1923 to 1945 dollars assuming US interest rate hikes in June and July.

According to the weekly chart of XAUUSD, the price has reached the upward trend line following the downward reversal from the rate of $2055. In this week’s trading, the ounce of gold will face the trend line again. It seems that the bearish momentum in the market has increased.

If selling pressures increase and the upward trend line is broken, the market structure will change to a downward trend its possible that the price drop to the first support area of $1,923, and the key support of $1,871

But if the trend line turns into support and the price crosses above the partial resistance of $1950, the market can start a new upward movement first up to the trend rate of $2000.

Weekly gold analysis by Alisabbaghi on TradingView.com

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Weekly gold Analysis

Fundamental View

Is gold still supported?

Although the ounce of gold had a rough week, falling almost $50 and experiencing its worst performance since February, we saw a bullish return to the market on Friday.

One of the biggest drivers for the ounce of gold was the strengthening of the US dollar. The price of an ounce of gold has an inverse relationship with the value of the US dollar. The US dollar strengthened in response to the country’s economic data and changed interest rate expectations. But last Friday, the head of the US Federal Reserve said interest rates may not rise much. He is concerned about the credit crunch in the American banking industry. Powell said that “financial stability tools have helped calm the situation. However, the developments in the American banking sector are such that they make financial and credit conditions difficult and will most likely harm economic growth, employment, and inflation. For this reason, perhaps there is no need for a quick and large increase in interest rates. And it happened that on Friday gold was supported in the range of 1950 and now it is trading in the range of 1980.

📅 Economic Calendar

In the coming week, the FOMC Minutes will be published. In the meantime, the GDP data will be updated and the desired inflation index of the Federal Reserve (PCE) will be at the center of attention.

US federal government debt crisis

This is a sign that the Federal Reserve may keep interest rates on record from June. After the words
The head of the US Federal Reserve, market interest rate expectations were weakened. From the point of view of the market, the possibility of an increase of 0.25 percentage points in the interest rate in June has reached 10%. Before this, the market was preparing to stop interest rate hikes from June. Several officials of the US Federal Reserve have backed away from the idea of stopping interest rate hikes. Even hopes for a rate cut at the end of 2023 have weakened.
Before the words of the head of the US Federal Reserve, the market was preparing for a 0.25 percentage point increase in the interest rate in June and had abandoned the expectation of a rate cut until the end of 2023. For this reason, we saw a sharp fall in the price of an ounce of gold. But it seems that the Federal Reserve Chairman’s comments have caused a change in interest rate expectations.

Technical View

According to analysts, it is expected that the price of an ounce of gold will experience an upward return from the current levels. However, there is a risk of an ounce of gold falling into the $1,900 range. The first resistance of the market is the 1980 range and then the 2000 dollar range. The support area of the market is in the range of 1960-1950 dollars. If negotiations to increase the federal government’s debt ceiling fail, the price of an ounce of gold could stabilize above $2,000.

Is gold still supported? by Alisabbaghi on TradingView.com

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Core CPI at 0.4% or lower changes the stocks, and gold to Green

US CPI Preview: Core CPI at 0.4% or lower monthly component gives stocks, and gold the chance to advance and the greenback.

With all due respect to non-farm payrolls, inflation reports have been much more powerful in shaping the direction of markets. That’s because the Fed is focused on fighting inflation, while the labor market is calm.

The consumer price index is the number one inflation index and in it, the Core CPI MoM is the most important figure. This reflects the most recent changes in inflation that the Fed can influence by changing interest rates. Unsustainable costs of energy and food, (which are determined in global markets) are excluded.

The economic calendar points to 0.4 percent in April, a repeat of April’s figure. This represents an annual gain of around 5%, which is lower than the expected annual increase of 5.5%. That’s good enough to allow stocks and gold to resume gains and the US dollar to weaken.

0.4% would have a limited effect, while 0.3% would have a more significant effect. Any number less than 0.3% is already causing huge moves.

Conversely, if the core CPI rises by 0.5%, stocks and gold will suffer, while the US dollar will rise. The 0.6% level (seen at the end of last year) will already trigger massive moves.


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Weekly gold Analysis

Fundamental View

Buyers of gold in recession, or sellers of it for a stronger dollar?

Volatility in the bond market and uncertainty about interest rate cuts are pushing the dollar higher, dimming the appeal of gold (XAU).

Last week, the recovery of the US dollar affected the price of gold (XAU) and put pressure on gold. Because market participants assessed the possibility of the Federal Reserve raising interest rates in May. However, there are still many buyers and markets for gold, who see the fear of stagnation more strongly.

Now for this week. There are many things in the US economic calendar that will help traders know what to expect from the Fed. Investors are monitoring Economic growth data (GDP), jobless claims on Thursday, and PCE data on Friday. The GDP print is expected to grow at an annual rate of 2.0% during this period, which means that a recession is not imminent. And If the PCE index prints much higher than expected, it reduces the likelihood that the Fed will hold off on rate hikes in May, especially if economic data is generally positive.

With this data, Investors evaluate the interest rate increase in May. Although the market expects a 25 basis point hike on May 3, uncertainty surrounding the possibility of a rate cut this year has caused volatility in the US bond market. The volatility of the bond market causes the dollar to move.

📅 Economic Calendar

The market is currently looking at a 25 percent hike, with the direction of travel determined by whether the Fed will hold off on interest rate changes after that. While this could support gold prices, the recent market rally and overly technical conditions mean there is still scope for a downside if the Fed’s rate outlook is confirmed. According to the CME FedWatch tool, there is an 84.6% chance of a 25% rate hike in May, with interest rate cuts expected later in the year. Higher interest rates reduce the attractiveness of non-yielding bullion.

Technical View

Gold has taken a downward trend in the four-hour time frame. This precious metal has locked itself in the $1960 to $2020 area. It shows that gold needs some drivers to rise or fall. Any sign of information that leads traders to fear further recession could push gold to the $2020-$2048 highs. But what we think is the better-than-expected print for the US economy makes more downward pressure on XAU.
Gold is currently trading at the price of $1982 dollars and is on a dynamic resistance. There is a possibility of a slight rise for gold at the beginning of the week, but we don’t have any rush to trade. If the economic data encourages us to sell gold, we will wait and do it in the $2000 to $2020 area, and if we going to buy gold, we will do it in $1960 or in the important key area of 1920 dollars.

Calendar events

Affecting news/events for gold

Thu Apr 27: 

🇺🇸 USD Advance GDP q/q and Unemployment Claims

Fri Apr 28:

🇺🇸 USD Core PCE Price Index and USD Employment Cost Index


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Gold price, affected by the weakening of the US dollar

Gold prices are under pressure from a weaker US dollar, and China’s economic recovery, but uncertainty about the Federal Reserve’s monetary policy is limiting growth.

Economic data suggest the economy is not yet close to recession, giving the Federal Reserve room to continue raising interest rates, despite being thought to be closer to the end of the rate hike cycle than other global central banks.

Traders are monitoring comments from Fed officials ahead of the April 22 blackout before the May 2-3 meeting.

The 10-year Treasury yield rose 8 basis points to 3.602 percent and the two-year U.S. Treasury yield rose 9.3 basis points to 4.196 percent, which typically reflects interest rate expectations.

According to CME’s FedWatch Tool, market expectations for a 25-point hike at the May meeting have risen to more than 86% (up from 78% on Friday).
This is the trigger for the decline of gold.
But on the other hand, China’s economic recovery weakened the dollar
However, gains in gold prices were limited by uncertainty over the US Federal Reserve’s monetary policy stance. Investors sought more clarity on the issue, which affected gold demand.

Despite this, news of China’s economic recovery picked up in the first quarter, with the country’s gross domestic product growing 4.5 percent year-on-year, beating expectations. This development increased demand for riskier assets, which in turn put some pressure on the US dollar and led to gold growth.
From a technical point of view, gold is trading within the ascending channel and is now at the bottom of the channel. The resistance level of 2003.55 is very important and the upward return of the price above this level will bring more buyers into the market. We should wait for the price reaction to the rate of 2003.55.

Overall, gold prices rose on Tuesday due to a combination of factors, including a weaker US dollar and news of China’s economic recovery. However, uncertainty over the US Federal Reserve’s monetary policy stance limited gains in the precious metal.


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Weekly gold Analysis

Fundamental View

Gold is still under buying pressure but it is at an important level

In the past week, gold was fixed above 2000 dollars. This consolidation was done right above the $2000 and $2002 area. Important and psychological area.
The momentum is still bullish and can rise again to its historical high. We mean the area of 2060. But this price jump definitely needs a catalyst as a driver.

The instability of the economy, the uncertainty in the decisions of the Federal Reserve to interest rate increasing cycles, the purchase of gold by central banks, the crisis of banks under the pressure of recession and inflation, as well as the decrease in bond yields make gold more attractive for buying than ever before.

If in the coming week, the employment data is higher than expected or if the inflation increases a lot, they can make gold fall sharply and return it to the previous level.

But any disappointing data or even close to expectations will stabilize gold in the current areas and even towards higher levels.

📅 Economic Calendar


Technical View

Technically, gold is slightly overbought at current levels. But what is seen in the candlesticks (downward shadows) shows the pressure on buyers in this area.

If there is no better than expected data for the US economy (employers and CPI), any drop in the price of gold to a lower level can be considered as a correction and another opportunity for buying gold again.

any price drop considered as a correction and a BUY opportunity by Alisabbaghi on TradingView.com


Calendar events

Important events for gold:

USD CPI and Core CPI, FOMC meeting on Wed

Ziwox calendar on 2023-04-10

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