Market Analysis

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Gold Prices Forecast: Firm Amid Middle East Tensions, US Economic Strength

April 19, 2024 4:28 PM +07:00

Key Points:

Gold rises, influenced by Middle East unrest and strong U.S. data.
Federal Reserve policies impact gold and dollar values significantly.
Central banks continue to purchase gold, stabilizing prices.

XAU/USD Edging Higher in Cautious Trade

Gold prices rose on Monday, influenced by geopolitical tensions in the Middle East and strong U.S. economic indicators. Despite gains in the dollar and Treasury yields, gold maintained its status as a safe haven, even as central bank activities and Federal Reserve policies significantly impact market expectations.

Geopolitical Impact on Gold Prices

The recent missile and drone attack by Iran on Israel, the first such aggression in over three decades, has stoked fears of an extended regional conflict, pushing investors towards the safety of gold. This movement aligns with expert analyses that point to the geopolitical situation as a key driver of the current rise in gold prices.

U.S. Economic Indicators and Federal Reserve Stance

March saw U.S. retail sales exceed expectations, indicating a robust economy. This development has adjusted market expectations about the Federal Reserve’s interest rate policies, with fewer rate cuts now anticipated by year-end. Comments from Federal Reserve Chair Jerome Powell highlighted the necessity for maintaining restrictive monetary policies, influencing both the dollar’s strength and investor strategies.

Central Bank Influence

Ongoing purchases by central banks have bolstered gold prices, demonstrating a strategic approach to gold reserves despite its high price. This sustained buying indicates that central banks are likely to continue supporting the market regardless of price fluctuations.

Short-term Market Forecast

While geopolitical premiums might decrease, causing gold prices to dip towards $2,200 in the near term, the overall market sentiment towards gold remains positive.

The continuous strategic buying by central banks and the enduring restrictive monetary policy stance of the U.S. Federal Reserve are expected to support gold prices. The market is poised for a bullish trend, underpinned by lasting global uncertainties and central banks’ unwavering interest in gold as a strategic asset.

Technical Analysis

Gold (XAU/USD) is higher on Wednesday, suggesting traders may be gearing up for a test of last week’s record high at $2431.59. A trade through this level will signal the resumption of the uptrend.

On the downside, the nearest support is a pair of minor bottoms at $2324.25 and $2319.39. This area could be the trigger point for an acceleration to the downside.

The daily chart indicates there is plenty of room to the downside under $2319.39 with the best target and support the 50-day moving average at $2126.69.

Quote source: Fxstreet

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Silver (XAG) Daily Forecast: Poised for Gain Amid Fed Cuts, $29 Target in View

April 11, 2024 11:17 PM +07:00

Key Points:

Silver eyes $29 as US Fed rate cut speculation and Middle East tensions boost safe-haven appeal.
Anticipation of US CPI data influences silver prices, with potential rate cut driving investor interest.
Silver maintains bullish trend above $27.60, technical analysis predicts continued upward momentum.

Market Overview

Silver prices have extended their winning streak and remained well bid around just above $28 level. However, the surge in silver prices can be attributed to a combination of factors, including speculation surrounding US Federal Reserve policy, geopolitical tensions, and upcoming US CPI data. These factors have contributed to increased demand for silver as a safe-haven asset and alternative investment.

US Fed Rate Cut and its Impact on Silver Price

On the US front, speculation regarding a interest rate cut by the US Federal Reserve tends to positively impact silver prices by weakening the US dollar, making silver more attractive to investors.

Market experts anticipate a rate cut during the Federal Open Market Committee (FOMC) meeting scheduled from April 30th to May 1st, 2024. This anticipation has been fueled by positive US non-farm data and expectations of favorable US Consumer Price Index (CPI) data.

Therefore, the possibility of a rate cut tends to weaken the US dollar, making silver and other commodities more attractive as alternative investments, thus driving up their prices.

Geopolitical Tensions in the Middle East

On the geopolitical front, ongoing tensions in the Middle East have bolstered silver prices as investors seek safe-haven assets. However, long-lasting conflicts and geopolitical uncertainties in the region have intensified, leading investors to turn to silver and other precious metals.

This surge in demand has driven silver prices to reach new highs. According to the latest reports, at least 33,207 Palestinians have been killed and 75,933 wounded in Israeli attacks on Gaza since October 7.

It is worth noting that Israeli Prime Minister Benjamin Netanyahu announced a scheduled ground offensive in Gaza’s Rafah, despite US opposition. This heightens geopolitical tensions, boosting silver prices as investors seek safe havens, anticipating increased demand amid escalating conflict fears.

Upcoming US CPI Data and its Impact on Silver Price

Another factor impacting silver prices is the upcoming US Consumer Price Index (CPI) data as stronger-than-expected CPI data could indicate higher inflationary pressures, prompting the Federal Reserve to take a more hawkish stance on monetary policy. Conversely, weaker CPI data could reinforce expectations of a rate cut, leading to further gains in silver prices.

Silver Prices Forecast

Silver currently trades at around $28, showing a slight correction of 0.05%. The commodity is hovering above a pivot point of $27.60, indicating a bullish stance in the market.

Resistance levels are staged at $28.12, $28.64, and a further stretch to $29.24, suggesting potential hurdles for upward momentum. Conversely, support is established at $27.19, followed by $26.66 and $26.15, marking zones where buying interest might reignite.

Technical analysis reveals bullish signals, underscored by recent bullish candle formations, pointing towards continued upside potential beyond the $27.94 mark.

The 50-day and 200-day Exponential Moving Averages at $24.63 and $23.62, respectively, further validate silver’s upward trajectory. The conclusion: Silver remains bullish above $27.60, with a downturn below this pivot potentially igniting a sharp sell-off.

Quote source: FX Empire

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Gold Price Forecast: Wedge Breakout Points to Higher Prices

April 9, 2024 5:23 PM +07:00

Pipscollector.com - Gold's breakout from a bull wedge signals a potential rally to higher targets, with buyers showing enthusiasm for further gains.

Gold broke out of a small bull wedge on Wednesday following the U.S. Fed decision on rates. It was a decisive breakout with gold looking like it is ready to head to higher targets. Given the sharp 7.7% rally prior to the wedge formation, a similar level of enthusiasm from buyers may be seen again. Now that the consolidation phase is complete, today’s bullish price action is indicating such a scenario.

Current Leg Up Potential to 2,320

It is possible to see some degree of symmetry between the new leg of the uptrend that started today, and the rapid advance that started before the consolidation wedge formed. This can be one way to estimate a potential target. Since there is no prior price action to consider, key price levels to watch need to be determined by other methods. Symmetry occurs when the price distance in the second leg up relative to the wedge pattern matches the distance in the first leg. Also, when there is a Fibonacci relationship seen in the second leg relative to the first.

The first leg is being measured from the beginning of the sharp move. A price of 2,039 was used in this case. It results in a potential target of 2,320. That target is higher than two earlier Fibonacci confluence zones. However, those two price zones are identified by only two Fibonacci measurements. More confluence would produce a price zone with greater significance. The first Fibonacci zone is from around 2,235 to 2,246, and the second from 2,277 to 2,298.

Signs of Strength

As noted previously, the existing breakout into new highs for gold that began last week has just started. This could be the beginning of a multi-year advance, if not a multi-month advance. That means that market participants will likely need to get aggressive and stay aggressive if they want to participate in these early stages of the advance. Entry setups may not last for long before price moves again. Gold is on track to end this March with its highest monthly closing price on record, which will provide a new confirmation of strength, and on a long-time frame chart.

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AUD to USD Forecast: Market Focus Shifts to US Producer Prices and Retail Sales

March 21, 2024 11:08 PM +07:00

Key Points:

The AUD/USD gained 0.23% on Wednesday, closing the session at $0.66212.
On Thursday, investors must consider economic data from China and any stimulus chatter from Beijing.
Later in the session, US producer price inflation and retail sales warrant investor attention.

Wednesday Overview of the AUD/USD

The AUD/USD gained 0.23% on Wednesday. Reversing a 0.11% loss from Tuesday, the Australian dollar ended the session at $0.66212. The Australian dollar fell to a low of $0.65994 before rising to a high of $0.66352.

China Stimulus and the RBA Dilemma

On Thursday, Beijing will remain in the spotlight as investors await a fiscal stimulus package. Lawmakers were not forthcoming during the National People’s Congress. However, the consensus is that China needs a fiscal stimulus package to meet the 2025 growth target.

A fiscal stimulus package could drive demand from China, a boon for the Aussie dollar.

One-third of Australian exports are bound for China. Significantly, Australia has a trade-to-GDP ratio of over 50%. 20% of the Australian workforce is in trade-related jobs.

The reliance on trade is significant, also exposing the Australian economy and the Aussie dollar to the slump in iron ore prices. Moves to bolster the Chinese real estate sector would drive demand for iron ore.

While investors await updates from Beijing, RBA monetary policy uncertainty also lingers.

In February, RBA Governor Michele Bullock left a rate hike on the table at the RBA Press Conference. The RBA Governor shared her view on inflation, saying,

“We want to see inflation continue to decline, and that’s more important than market pricing. Inflation has a four in front of it, which is too high.”

Wage growth and consumer spending continue to fuel demand-driven inflation. Significantly, the lingering threat of an RBA rate hike is an Aussie dollar tailwind.

There are no economic stats from Australia. However, stats from China could move the dial. New Yuan loan numbers for February will reflect the demand environment in China. Economists forecast new Yuan loans to increase by CNY1,500 billion after rising by 4,920 billion in January.

US Economic Calendar: Retail Sales and Producer Prices in Focus

On Thursday, US producer prices and retail sales warrant investor attention. Hotter-than-expected retail sales figures could impact bets on an H1 2024 Fed rate cut. Consumer spending fuels demand-driven inflation. A higher-for-longer Fed rate path may impact disposable income, curb consumption, and dampen demand-driven inflation.

Economists forecast retail sales to increase by 0.8% in February after falling 0.8% in January.

However, US producer prices may also influence Fed interest rate cut expectations. Producers raise prices in an improving demand environment, passing prices onto consumers.

A higher-for-longer Fed rate path could impact demand and pressure producers to lower prices.

Economists forecast producer prices to increase 1.1% year-on-year in February after rising 0.9% in January.

Short-Term Forecast

Near-term AUD/USD trends will hinge on the US retail sales and producer price numbers. Better-than-expected US data may pressure buyer demand for the AUD/USD. However, monetary policy divergence remains tilted toward the Aussie dollar. The markets expect the Fed to cut interest rates in H1 2024. In contrast, the RBA is willing to raise interest rates.

AUD/USD Price Action - Daily Chart

The AUD/USD remained above the 50-day and 200-day EMAs, affirming bullish price signals.

An Aussie dollar return to the $0.66500 handle would support a move to the $0.67003 resistance level.

Chatter from Beijing, market risk sentiment, and the US economic calendar need consideration.

Conversely, an AUD/USD drop below the $0.66 handle would bring the 200-day EMA into play. A fall through the 200-day EMA would give the bears a run at the $0.65760 support level and the 50-day EMA. Buying pressure could intensify at the $0.65760 support level. The 50-day EMA is confluent with the support level.

Considering the RSI indicator, a 14-period Daily RSI reading of 60.60 suggests an AUD/USD move to the $0.67003 resistance level before entering overbought territory.

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Gold Prices Forecast: XAU/USD Higher Ahead of Powell’s Testimony, ADP Data

March 7, 2024 8:06 PM +07:00

Key Points:

Gold prices rise for six consecutive sessions on anticipation of Powell's testimony.
Market awaits Powell's insights on Fed's rate cut plans and monetary policy stance.
Political factors and economic indicators contribute to market complexity.

Gold Market Outlook

Gold prices have risen for six consecutive sessions, fueled by anticipation of Federal Reserve Chairman Jerome Powell’s testimony and the ADP private sector jobs report. Market focus is on Powell’s monetary policy stance and its implications for interest rates, which have significant consequences for gold prices.

Fed’s Powell and Monetary Policy

Jerome Powell’s semi-annual testimony to Congress is a critical event for investors. The market seeks insights into the Fed’s rate cut plans and its stance on monetary policy amidst a complex economic backdrop. Recent changes in the Fed’s approach, from highly accommodative to more cautious, have led to adjustments in market expectations. Powell’s testimony is expected to provide a balance between acknowledging economic progress and a commitment to future rate cuts, without unsettling the markets.

Economic Indicators and Inflation Concerns

The U.S. economy shows mixed signals, with recent inflation trends nearing the Fed’s 2% target but facing challenges from higher consumer prices. Powell is expected to address these trends, emphasizing a cautious but progressive approach to monetary policy. The anticipation of rate cuts, coupled with ongoing economic uncertainties, heightens the focus on Powell’s interpretation of inflation and economic data.

Political and Market Trends

Political pressures and market conditions add complexity to the Fed’s decision-making process. Amidst speculation and liquidity concerns, the Fed faces a delicate task in shaping monetary policy that aligns with economic objectives without exacerbating market volatility. Political factors, particularly during an election year, also play a role in shaping the Fed’s strategies and public messaging.

US Labor Market Reports

The upcoming U.S. non-farm payrolls (NFP) data is another key factor influencing market sentiment. Although the job market appears robust, there are indications of softening in certain sectors. The report will provide crucial insights into labor market strength and its impact on the overall economy.

Short-Term Forecast

The culmination of Powell’s testimony and the labor market reports will offer a clearer picture of the U.S. economic outlook. Indications of a potential Fed rate cut could positively influence gold prices, as investors often turn to gold as a hedge against economic uncertainties and currency devaluation.

Given the current economic indicators and the Fed’s cautious approach, the short-term outlook for gold remains bullish. Investors are likely to continue favoring gold as a safe-haven asset amidst uncertain interest rate movements and ongoing economic complexities. Additionally, this rally has been primarily supported by central bank buying so prices are likely to remain underpinned until they stop their buying spree.

Technical Analysis

Daily Gold (XAU/USD)

XAU/USD is edging higher on Wednesday with upside momentum relatively slower as the market approaches December’s high at $2149.00.

Gold is moving vertically and is well above its nearest major support – the 50-day moving average at $2038.20 – making it vulnerable to a near-term setback.

The best sign of near-term selling pressure will be a classic higher-higher, lower-close or closing price reversal top.

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Top Analysis

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Forex

Currency market: FX next week

September 21, 2023 1:11 PM +07:00

Pipscollector.com - Overbought DXY and oversold EUR/USD for the past 2 months traded maximum at 150 pip ranges for each of the prior 8 weeks. Spot market EUR/USD Futures contracts since July traded 2 day highs at 300,000 contracts and a fairly normal 150,000 to 200,000 per day contracts. In days long past and never to return, EUR/USD traded 500,000 to 700,000 per day contracts regularly. No such concept as a 300,000 contract day existed.

The absence of spot market contracts found a new home in Currency swaps and interest rate contracts. Japan for example traded 400,000 Currency Swap contracs in 1998 and today well over 2 million while Spot Market contracts since 2015 / 2016 traded on an upswing at barely 200,000 contracts from multi year lows at 35,000.

Japan interest rate contracts in 1998 traded 9,000 per day and today contracts rose to 65,000 and at all time highs. EUR, JPY and DXY are most widely traded while JPY and USD market share account for 74.4% and 71.4%. Most popular are contracts with maturities at 1 year or less. Japan alone accounts for 87 trillion USD in Notional amounts.

Currency Swaps and Interest rate contracts ensured Spot markets traded limited weekly ranges. DXY amd EUR/USD for example traded 100 and 150 pip weeks in each of the past 8 weeks while USD/JPY traded 200 pips.

Anchor currencies must be viewed in total as permanent 200 pip weeks at the maximum and 300 peaks for GBP/JPY and wide rangers, GBP/NZD, EUR/NZD, EUR/AUD and GBP/AUD.

The week

DXY is in the same position as the past 8 weeks as severely overbought at 105.00's and 200 pip ranges from 103.00's to 105.00's.

EUR/USD targets long term at 1.1033 on breaks at 1.0855 and 1.0940 while GBP/USD targets 1.2746 on breaks at 1.2605 and 1.2665. EUR/USD on a break of 1.0940 ranges from 1.0940 to 1.1108 while GBP/USD ranges from 1.2665 to 1.2861.

Economics

Import Prices for all economies remain elevated which means CPI and Inflation also remains high. When Import prices drop then Inflation drops. The month of significant releaes is over except for the BOJ's Producer Prices next week on Tuesday.

The BOJ's producer prices will answer the question to USD/JPY intervention.

YCC

The Tamura and recent BOJ Nakamura speeches answered the YCC expansion from 0.5 to 2.00 for the 10 year JGB yield as a protection to Inflation. As suspected due to past expansion were derived from Inflation rises.

USD/JPY 146.00's are blocked by the BOJ in a range from 146.42 to 148.43. My view is overbought ay 148.44 to 146.67. Break at powerful 146.00's is required to target 145.76 and 144.87.

AUD/USD next week targets easily 0.6500's while NZD/USD targets 0.6000's.

Best trades are short wide rangers: EUR/AUD, GBP/AUD, GBP/NZD, EUR/NZD. Further, USD/JPY, GBP/USD, GBP/JPY.

AUD/USD and EUR/USD serves as a double trade to GBP/USD while CHF/JPY serves its purpose as a double trade to USD/JPY.

The new permanent condition for currency markets is flattened ranges at barely 200 pip weeks.

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Bitcoin

Crude Oil Outlook Dims on Debt Limit & Recession Risks, Double-Top Pattern Eyed

January 17, 2024 10:55 AM +07:00

Pipscollector - Weekly Crude Oil (WTI) Price Analysis Report

CRUDE OIL FORECAST:

Oil prices rebound during the week, but the near-term outlook remains somewhat bearish
Uncertainty over crude oil demand and stalled U.S. debt ceiling negotiations create a negative backdrop for energy markets
The double-top pattern in WTI’s daily chart signals prices could head lower in the coming days

Pipscollector - Crude oil prices (as measured by West Texas Intermediate front-month futures) experienced a modest decline on Friday, settling near $71.30 per barrel, but closed higher on a weekly basis, ending a four-week losing streak that has been fueled by heightened uncertainty about the demand outlook and non-stop recession talk on Wall Street.

Influence from the US economy

While the U.S. economy has remained resilient and managed to avert a recession so far, market indicators, such as the inversion of the yield curve, signal a downturn is on the way. True, the economic landscape could defy expectations and turn more positive, but recent turmoil in the banking sector has left little room for optimism, complicating the soft-landing narrative.

With the United States possessing the largest GDP worldwide, a contraction of its economy has the potential to significantly curtail global growth, resulting in a decrease in the overall demand for fossil fuels. This, in turn, could adversely impact crude prices, leading to a steep sell-off in cyclical commodities.

The ongoing U.S. debt ceiling impasse is exacerbating the challenges faced by energy markets. If the federal government fails to lift the borrowing cap in time, the Treasury Department could run out of cash to pay its obligations as soon as June 1, setting the stage for a default. This scenario would have catastrophic consequences for the economy and the financial system.

Forecast

It is likely that Democrats and Republicans will manage to secure a deal at the last minute, that’s the nature of politics in Washington. However, such an agreement may only come after markets have begun to convulse and experience significant turbulence.

In the current environment, oil prices could be skewed to the downside, so further losses should not be ruled out. With investor confidence fragile, conditions can turn treacherous quickly and without warning, so traders should remain vigilant and stay tuned to the news, with particular attention to the debt ceiling saga.

CRUDE OIL TECHNICAL ANALYSIS

In terms of technical analysis, WTI oil appears to be forging a bearish double-top formation. While the pattern is not yet complete, it may be confirmed soon if prices break below neckline support near the psychological $70.00 level. If this floor is breached, sellers may launch an attack on the $66.00 region. On further weakness, we could see a retest of the 2023 lows.

On the flip side, if prices manage to rebound from current levels, initial resistance lies at $73.80. A successful move above this barrier would invalidate the double top, opening the door for a climb toward $76.50.

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US Dollar

US Dollar Weekly Forecast: DXY Breaks Higher Ahead of the Fed’s Key Inflation Gauge

January 9, 2024 2:26 PM +07:00

Pipscollector - Weekly US Dollar (USD) Analysis Report

US DOLLAR WEEKLY FORECAST: BULLISH

The US Dollar rose the most over 2 weeks since September
Rising Treasury yields continued cooling Fed rate cut bets
All eyes turn to the central bank’s preferred inflation gauge
DXY broke above the 100-day SMA, broader reversal ahead?

Fundamental Analysis

The US Dollar rallied against its major counterparts this past week. In fact, the DXY Dollar Index rose about 1.9% over the past 2 weeks. That is the best 10-day period for the world’s reserve currency since the middle of September. Let us take a closer look at what happened to the US Dollar and why there could be more strength in store ahead.

For one thing, the US Dollar’s ascent has been met with a similar uptake in front-end Treasury Yields. That is a sign that financial markets are slowly pricing out near-term rate cuts from the Federal Reserve, which were aggressively priced ever since the collapse of Silicon Valley Bank (SVB) triggered liquidity and recessionary concerns.

In recent weeks, ebbing financial market volatility, sticky underlying US inflation and what appears to be a still-tight labor market underscored economic resilience amidst the most aggressive monetary tightening cycle in decades. Meanwhile, during a speech on Friday, Fed Chair Jerome Powell confirmed that interest rates might not have to rise as far given recent credit stress.

That said, he noted that he did not yet decide about future tightening and highlighted that the market rate path is much different from the central bank’s forecast. As such, markets are only pricing in about a 25% chance of another rate hike in June. As usual, incoming economic data will continue deciding the fate of monetary policy.

The US Dollar will be closely eyeing the PCE Core Deflator on Friday, due at 12:30 GMT. The Fed’s preferred inflation gauge is expected to remain unchanged at 4.6% y/y in April. That is not a good sign from the perspective of the central bank. Initial jobless claims will be another interesting print, due at the same time but on Thursday. There may yet be more room to cool near-term rate-cut bets, offering support for the US Dollar.

Technical Analysis

Looking at the daily chart, the US Dollar broke above the 100-day Simple Moving Average (SMA). This might be an early warning sign that the dominant downtrend since September might be turning. Key resistance appears to be the 23.6% Fibonacci retracement level at 104.11. Clearing that exposes the March high at 105.88. Otherwise, key support is the 100.82 – 101.29 zone.

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