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MTrading Team • 2023-11-17

Gold buyers eye $2,000 as US data, yields weigh on US Dollar

Gold buyers eye $2,000 as US data, yields weigh on US Dollar

Cautious optimism prevails in the market as traders cheer fewer odds favoring the Fed’s further rate hikes, as well as optimism surrounding China’s diplomatic ties with Japan and the US. That said, the downbeat prints of US inflation and employment clues published so far in the week pushed traders away from the Greenback while helping the commodities and Antipodeans.

With this, the US Dollar Index (DXY) braces for the weekly loss while Gold price eyes the biggest weekly jump in four. It should be noted that the crude oil fails to cheer a softer US Dollar amid fears of softer energy demand from the West, as well as the OPEC+ readiness to ease the supply cuts if needed.

Elsewhere, GBPUSD remains depressed on a day due to the disappointing UK Retail Sales, while posting weekly gains, whereas EURUSD bulls take a breather ahead of ECB President Lagarde’s speech.

It should be noted that BTCUSD and ETHUSD eye the first weekly loss in five despite refreshing the multi-month top earlier in the week as traders reassess optimism surrounding the Spot ETF approvals and industry dynamics.

Following are the latest moves of the key assets:

  • Brent oil prints four-day downtrend at the lowest level in six-weeks, near $77.80 at the latest.
  • Gold price picks up bids to reverse the previous weekly fall, mildly bid near $1,985 as we write.
  • USD Index struggles to extends the mid-week rebound from a 2.5-month-low to near 104.50 by the press time.
  • Wall Street closed mixed but the Asia-Pacific stocks edged lower. That said, equities in Europe and the UK begin the day with indecision.
  • BTCUSD and ETHUSD both print mild losses to around $36,300 and $1,980 at the latest, paring the previous day’s heavy gains.
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US data, yields weigh on US Dollar and fuel XAUUSD…

The US Dollar Index (DXY) not only reverses the previous weekly gains but also remains pressured at the lowest level in three months as most of the US economics published during the week have been disappointing for the Fed hawks. Also, the market’s rush toward the US Treasury bonds drowned the yields and exerted downside pressure on the USD, which in turn fuelled the Gold Price, especially amid China’s likely improving ties with the US and Japan. Additionally, expectations of witnessing more stimulus from Japan and China, as well as strong economics in India also allow the XAUUSD bulls to keep the reins.

Apart from the data, the mixed commentary from the Federal Reserve (Fed) officials also weighed on the US Dollar and yields, which in turn allowed the Gold Price to march. Furthermore, allegations of bond market manipulations also directed traders toward the XAUUSD. That said, Cleveland Fed President Loretta Mester said whether further hikes are needed depends on the economy. Fed’s Mester also said she expects growth to slow below the trend. Also, Fed Governor Lisa Cook cited two-sided risks for the economy while also expecting a soft landing. A report claiming three Fed officials see the case for “considerable Fed balance sheet decline” also weakened the need for higher rates and challenged the policy hawks.

To sum up, the market’s indecision fuels the Gold price amid the downbeat US Treasury bond yields.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

ECB’s Lagarde, US data eyed…

European Central Bank (ECB) President Christine Lagarde’s speech will join the US housing data and a few second-tier Fed officials’ speeches to entertain the Gold traders. It’s worth noting that ECB President Lagarde said on Thursday that Europe's financial system has avoided the worst-case scenario. Further, ECB policymaker Mario Centeno said Thursday that Interest rates will not desirably return to zero but will come down eventually. With this, the market players will seek more clues to confirm the end of hawkish monetary policies, as well as softer yields, from the data ahead of next week’s preliminary PMIs for November and FOMC Minutes.

May the trading luck be with you!