Recession worries facilitate Gold’s ascent.

Economic data highlighting the negative aspect of the US economy, have facilitated gold’s upwards movement, with the precious, remaining well above the $2000 key psychological level as these words are being written. Last Thursday, the US Initial Jobless Claims came in much higher than anticipated, with the actual figure coming in at 242k in addition with the Preliminary Non-Farm productivity on a QoQ basis worsened drastically by coming in at -2.7, greatly stressed the rapid deterioration in economic growth in the US. In addition, the continued failure by the legislative authorities in the US to resolve the debt ceiling standoff have intensified market worries that there is a very real possibility that the US Government may default on its debt, leading to catastrophic failures seen instantly as the “X-Date” may be as soon as June 1 . The persistent fears of the US defaulting on its debt, resulted in outflows from the greenback, as traders’ worries intensify, highlighting the very sensitive situation that currently exists in the US. In addition, the continued banking fears surrounding Pacific West Bancorp that may be the next bank to declare bankruptcy in the US, has allowed gold to capitalize from both events respectively given its safe haven status in times of financial instability. However, we note that the US Non-Farm Payrolls figure for April came in much higher than anticipated in addition to the unemployment rate for April reaching all-time lows reversing some of Gold’s gains in the past days, as the US employment market remains tight and possibly easing worries for the economic outlook, that may not be as dire as was initially anticipated. Overall, the financial releases from last week facilitated short-term inflows into the precious metal, as market worries of a recession were heightened at some point.

Gold traders find support following the Fed interest rate decision.

The Fed last Thursday hiked interest rates by 25 basis points, as was anticipated by market analysts. Following the news, the greenback weakened which allowed the precious metal to capitalize on a weaker dollar and continued its upwards ascent supported by the FOMC’s accompanying statement mentioning that “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook” implying that the bank may remain on hold in the future. However, the relatively hawkish comments by Fed Chair Powell that it is “not appropriate to cut rates” seemed to undermine market predictions of possible rate cuts after the summer but had no visible effect on Gold’s ascent.

Analyser la technique

XAUUSD H4 Chart

• Support: 2005 (S1), 1975 (S2), 1940 (S3)
• Resistance: 2045 (R1), 2075 (R2), 2110 (R3)

Gold’s price seems to continue in an upwards fashion, having failed to break below the support level at 2005 (S1). We tend to maintain a bullish outlook for the bullion, and supporting our case is the RSI indicator below our 4hr-chat breaking above the reading of 50. For our bullish outlook to continue we would like to see a clear break above the 2045 (R1) resistance barrier and a move towards the 2075 (R2) resistance line once again. Should the Bulls break above R2 then gold will most likely set new all-time highs, which could weaken the bulls resolve. On the other hand, should the bears take over, we may see a break below the support at the 2005 (S1) level with the next potential target for the bears being the 1975 (S2) support base. Please note that the support and resistance levels have a wide margin between them, yet the bullion was able to cover that distance within 24 hours.

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Mixed economic data keeps the precious muted

The mixed economic data stemming from the US has facilitated gold’s sideways movement, with the precious, remaining on hold near the $1985 level as these words are being written. Last Thursday, the US GDP rate for Q1 came in much lower than expected, with the actual rate coming in at 1.1%, in combination with the core PCE rates coming in higher than anticipate on a year-on-year basis for March, highlighted the continued deterioration in economic growth and the persisting high inflationary pressures in the US economy, respectively. In addition, the statements by Treasury Secretary Yellen may have provided temporary support for gold, as the “X-Date” for the US to default on its debt may be as soon as June 1 . The heightened fears of the US defaulting on its debt, facilitated inflows towards the precious given its store of value attribute and as such may find short term support until the matter is resolved. Furthermore, the renewed banking fears surrounding the collapse of First Republic re-ignited fears of a banking crisis in the US, which allowed gold to capitalize on a weaker greenback, given its safe haven status in times heightened financial instability. However, we note that the announcement by JPMorgan on Monday that it had purchased First Republic, seems to have temporarily alleviated pressure on the banking sector, thus capping the gains made by gold. In addition, the US ISM Manufacturing data for April, which was released on Monday, projected a stronger than anticipated manufacturing output by exceeding analysts’ expectations, thus renewing confidence into the US economy ,as the potential for a recession was downplayed. Overall, the financial releases from last week facilitated short term inflows into the precious metal, as market worries of a recession were heightened, yet contradicting financial releases have increased uncertainty in the market, as traders eagerly await the FOMC interest rate decision.

Gold traders itching for FED interest rate decision

The Fed is due to release their interest rate decision on Wednesday, with the Feds Funds Futures currently implying a 92% probability that the Fed will raise interest rates by 25 basis points. A validation of the 25-basis point expectations or an unexpected 50 basis point hike, could boost inflows towards the greenback et tarnish the precious due to their negative correlation. On the other hand, should the Fed surprise the markets and in the off chance that it choses to remain on hold, we may see gold soaring past its previous peak at $2050 and edge closer to its all-time highs, by capitalizing on a weaker greenback. Although gold traders may be more interested in the forward guidance released by the Fed, in which should a negative economic outlook be presented it could further fuel fears of a recession, whereas a should a positive economic outlook be broadcasted it could facilitate inflows to the greenback as investor confidence is regained, hence leading to outflows from the precious. Lastly looking past the Fed’s decision market participants will shift their attention towards the US Employment data on Friday, with heavy emphasis being placed on the US Non-Farm Payrolls figure for April which is predicted to decrease to levels last seen in February 2021. In the event that the predicted figures are materialized, we may see the greenback further weaking, leading to further inflows into the bullion whereas a better than predicted figure could strengthen the dollar and thus weaken the precious.

Analyser la technique

XAUUSD H4 Chart

• Support: 1975 (S1), 1940 (S2), 1900 (S3)
• Resistance: 2005 (R1), 2040 (R2), 2075 (R3)

Gold’s price seems to continue in a sideways fashion since last week’s report, having broken below the upwards trendline on the 19   of April and has now formed a sideways channel. We tend to maintain a neutral outlook for the bullion, as long as the price action stays within the bounds of the channel, remaining confined between the 1975 (S1) and 2005 (R1) levels, with the RSI indicator staying near the reading of 50. For a bullish outlook to occur we would like to see a clear break above the 2005 (R1) resistance barrier and a move towards the 2040 (R2) resistance line. On the other hand, should the bears take over, we would require to see a clear break below support at the 1975 (S1) level with the next potential target for the bears being the 1940 (S2) support base. However, we note that the expected financial releases this week could heavily impact the gold bullion’s price in either direction, therefore caution is advised.

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

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Gold trades slightly lower following heightened recession fears.

The mixed economic data stemming from the US has facilitated gold’s descent, with the precious, gradually losing momentum. Last Thursday, the US Philly Fed Manufacturing Index, came in much lower than expected with the figure standing at -31.3, indicative of a continued deterioration of US manufacturing conditions further weakened the greenback, as the continued decline in manufacturing production further fueled fears of a recession.Following the Fed’s Beige book release last Tuesday, the Philly Fed Manufacturing Index supported the Fed’s statements that overall economic activity has remained relatively unchanged in recent weeks, with manufacturing activity being widely reported as “as flat or down even as supply chains continued to improve”, heightening fears of a recession in the US economy. L'or as a result saw inflows, as the bullion is universally considered to be a hedge against times of economic downturn due to its safe haven status. However, US PMI figures released on Friday painted a different picture, as gold traders saw a U-turn in the markets with fears of a recession being played down and the precious saw outflows as the greenback strengthened, reversing its gains in the previous trading session. It would appear that the contradictory figures have sent gold traders in limbo, as the stronger than expected Manufacturing, Composite & Services PMI figures could provide an indication that the Fed may continue with its rate hiking path, despite the alarm being sounded by the Fed’s Beige Book and the Philly Fed Manufacturing index in regards to a recession. Even though fears of an impending recession cloud the markets, the short–term outlook appears to better than originally forecasted, which tends to provide support for the bullion ahead of this week’s highly anticipated preliminary GDP rate for Q1 et crucial Core PCE data. Furthermore, we highlight that the US Treasury 2-year and 10-year yields have declined the past week, given that the risk that the US will default on its debt has increased. Therefore, as the US treads closer to its debt ceiling limits, this has facilitated temporary inflows into the precious metal as US treasury bonds are considered to be less attractive alternative, until the debt ceiling is raised by the legislative bodies. Hence, in the event that no progress is made and the US inches closer to the risk of defaulting on its debt, the door may open for further inflows into gold. Overall, as a result of contradicting financial releases and external political implications, it would appear that gold may continue hovering near the $2000 key psychological level until the market has adequate information, in order to reassess and readjust their outlooks. Finally, we also note that the FOMC has entered it’s blackout period, with no policymakers holding speeches until after the Fed’s meeting next Wednesday.

Analyser la technique

XAUUSD H4 Chart

• Support: 1985 (S1), 1950 (S2), 1900 (S3)
• Resistance: 2015 (R1), 2045 (R2), 2075 (R3)

Gold’s price seems to be moving in a sideways fashion, having broken below the upwards trendline on the 19   of April. We tend to maintain a neutral outlook as the price action revolves around the 1985 (S1) level with the RSI indicator staying near reading of 50. However, we highlight the fact that the precious metal has previously broken below S1, which may imply bearish tendencies. For our neutral outlook, to continue we would require gold’s price to stay around the 1985 (S1) level and the 2015 (R1) resistance level with the RSI indicator remaining near 50. For a bullish outlook to occur we would like to see a clear break above the 2015 (R1) resistance barrier and a move towards the 2045 (R2) resistance line. On the other hand, should the bears take over, we would require a clear break below support at the 1950 (S2) level with the next potential target for the bears being the 1900 (S3) support base.

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

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Gold stays near the $2000 key psychological level

The mixed economic data stemming from the US has halted gold’s ascent at it’s current levels, with the precious, slightly losing momentum. Last Wednesday, the US CPI print for March ticked down to 5% for the first time since the 10   of June 2021. The lower than predicted drop highlighted that the Fed’s fight against inflation may be yielding results and as a result weakened the greenback. Since the latest CPI print broadcasted indications of lower inflation that may ease the pressure on the Fed to continue their aggressive rate hiking path in order to avoid a recession. Following the inflation report on Wednesday the market grappled with the latest Fed meeting minutes, that indicated that Fed members anticipate a mild recession in the US , which boosted inflows towards the precious. L'or is unanimously considered to be a universal hedge against times of economic downturn, due to its safe haven status. Furthermore, the Initial Jobless Claims figure released on Thursday, came in higher than predicted with the actual figure standing at 239k versus the predicted figure of 232k, supporting the view that the US employment market is losing steam. This facilitated gold, to further capitalize against a weaker greenback and allowed the metal’s price to move towards its all–time highs. On Friday howeverle mixed narrative from the US Retail sales and the University of Michigan’s expectations capped the precious métaux ascent at around $2045 level. Even though the retail sales figures for March came below estimates, indicating a reduction of consumer spending in the economy, hence the potential for a slowdown may have weakened the greenback. However, the big picture was that Industrial production for March increased, in addition to a greater than expected reading of the University of Michigan’s indicators, signaling confidence in the US economy as a whole and may have mitigated fears of a recession. More importantly, the greater than expected earnings reports from major banks such as JP Morgan, Wells Fargo et Citibank signaled that the banking crisis fears may have been eradicated, thus providing some form of stability in the markets going into this week’s banks earnings releases. As a result, despite the precious gaining support due to indications of lessening inflationary pressures in the economy, the contradictory data et earnings releases on Friday provided support for the greenback leading to outflows from the precious metal. Given the weakness from employment indicators, in addition to tightening consumer spending from the retail sales report, the Fed may have lost some leeway in the event that they decide to further hikes rates, in order to further reduce inflationary pressures. However, statements made by Fed officials indicate otherwise, such as Fed Governor Waller who stated during a speech on Friday, “This growth would mean that, so far, tighter monetary policy and credit conditions are not doing much to restrain aggregate demand”,implying that the Fed may need to raise interest rates further during their May meeting, thus translating into support for the greenback. Furthermore, according to Reuters, Minneapolis Fed President Kashkari stated last Wednesday that allowing inflation to stay would be even worse for the labour market. Hence the relatively hawkish comments, pushed traders to speculate that rate hikes are still on the Fed’s agenda, as FFF at the time of this report implied an 88% probability of the Fed increasing interest rates by 25 basis points in their May meeting. The hawkish comments did not result in major fluctuations in the price of gold, yet we note a slight decline in the price of the precious as the greenback strengthened. On a monetary note, traders may anticipate the remaining three speeches by FOMC members Bowman, Waller et Cook throughout the week, as they may provide further indication into the Fed’s decision in May before the FOMC blackout period beginning this Sunday.

Analyser la technique

XAUUSD H4 Chart

• Support: 1985(S1), 1950 (S2), 1900 (S3)
• Resistance: 2015 (R1), 2045 (R2), 2075 (R3)

Gold’s price seems to be moving in an upwards fashion, validating the upwards trendline formed on the 15   of March. We tend to maintain a bullish outlook as long as the price action remains above the 1985 (S1) level with the RSI indicator moving towards 70. However, we highlight the fact that the RSI indicator is currently near the figure of 50, implying temporary indecisiveness in the market. For our bullish outlook, to continue we would require the price to make a clean break the above the 2015(R1) resistance level, breaking also the 2045 (R2) resistance barrier and aiming for gold’s all-time high at the 2075 (R3) resistance line . Should the bears take over, we would require a clear break below the support line of 1985 (S1) and a move towards support at the 1950 (S2) level potentially moving even lower. Should the precious fail to break above 2015 (R1) and break below 1985 (S1) and the RSI indicator remaining near 50, we may see gold move in a sideways motion between R1 and S1.

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

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Gold stays near the $2000 psychological level

The wide uncertainty that had existed during the past few weeks appears to have vanished, yet the precious held its ground between last week’s opening and closing range, remaining relatively unchanged. Last Wednesday the US JOLTS Job openings for February dropped under 10 million for the first time since the 7   of July 2021. The unexpected drop highlighted that the US labour market may be losing steam and as a result weakened the greenback, as speculation of a recession increased. Thus, given that the shiny metal is perceived to be a hedge against economic downturn, traders saw safe heaven inflows into the precious following the announcement. Furthermore, right on the heels of the JOLTS Job Openings report, the ADP Non-Farm payrolls figure was released, which supported the JOLTS figure, indicating the loosening of the tightness of the US employment market. This resulted in gold further capitalizing against a weaker greenback and allowed the metal’s price to break above the $2000 psychological level and move towards its all–time highs. On Friday however, the narrative shifted as the Non-Farm Payrolls report recorded once again solid results. Even though the headline figure came below estimates by only 3k, in the grander scheme of things the addition of 236k during the month of March, signals that the US labor force remains tight. More importantlyle unemployment rate eased to 3.5%, just shy of the lowest levels ever recorded and serves as another indication that the employment markets remains hot. As a result, despite the precious gaining support due to the ADP Non-Farm Payrolls and Jolts Job openings figuresle gains made by the ADP NFP figure were wiped within the next two trading sessions as the greenback gained support leading to outflows from the precious metal. Given the continued tight labour marketle Fed may have some leeway in the event that they decide further rate hikes are necessary in order to continue their fight against inflation. Thus, with the possibility of future rate hikes back on the table given the resilient results from the NFP reportle market now foresees that the central bank will hike by 25 basis points in its next meeting on the 3  of May, evident from the 71.4% probability from Feds Funds Futures. Furthermore, NY Fed President Williams who on Monday dismissed the notion that the Fed’s interest rate policy was behind the collapse of SVB stating that he personally doesn’t think “it was the case that the pace of rate increases was really behind the issues at the two banks back in March”. Hence the relatively hawkish comments, facilitated traders to speculate that rate hikes are still on the agenda. It should be noted that despite the hawkish remarks made by NY Fed President Williams, the comments did not result in major fluctuations in the price of gold, which could be due to the release of the March survey of Consumer of expectations by the NY Fed where “respondents were more pessimistic about future credit availability as well, with the share of households expecting it will be harder to obtain credit a year from now also rising”. Potentially fueling continued fears of a recession in the near future thus offsetting the hawkish remarks. The highlight of the week, however, is the widely anticipated US CPI print on Wednesday, that should provide valuable insight for traders as to the degree to which inflationary pressures still persist in the US economy.  Should there be a deceleration of inflationary pressure we may see the precious metal strengthen, whereas a higher than anticipated print, could weaken gold’s price since it may signal that inflationary pressures remain persistent in the US economy. Hence, we may see the precious remain relatively stable as gold market traders await for the results of the report.

Newmont and Newcrest merger potentially setting a new record

According to Reuters, US based Newmont offered to buy Australia’s Newcrest Mining LTD for $19.5 billion, potentially extending Newmont’s control as the world’s biggest gold producer. If the merger proceeds as planned, we may see Newmont’s gold output nearly doubling against it’s rival Barrick Gold Corp as stated by Reuters. According to S&P Global Market Intelligence, the merger may allow Newmont to have a greater control over the current precious prices, as their ability to control approximately 8.9% of the world’s global gold supply, may provide leverage in future negotiations et gold outputs. Hence, the shiny metal’s price may benefit from this merger as control of global supply solidifies, hence may reduce Volatilité in the market.

Analyser la technique

XAUUSD H4 Chart

• Support: 1985 (S1), 1950 (S2), 1925 (S3)
• Resistance: 2025 (R1), 2050 (R2), 2070 (R3)

Gold’s price seems to be moving in an upwards fashion having broken above previous resistance now turned support at 1985 (S1) level. We tend to maintain a bullish outlook as long as the price action remains above the 1985 (S1) level with the RSI indicator moving towards 70.  For our bullish outlook, to continue we would require price to make a clean break the above the 2025(R1) resistance level, aiming if not breaking also the 2050 (R2) resistance barrier formed on the 5   of April, that has yet to be retested. Should the bears take over, we would require a clear break below the support line of 1985 (S1) and a move towards support at the 1950 (S2) level potentially moving even lower.

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

The post Gold near to its peak appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Gold stays near one year highs

The wide uncertainty in the global banking sector appears to have subsided, yet the precious held its ground between last week’s opening and closing range, remaining relatively unchanged. The surprise decision by OPEC+ on Sunday, to reduce their oil production by 1.16 million barrels per day, reignited fears of prolonged inflationary pressures. This serves as a problem for Fed officials as in the previous months, as relatively low oil prices, kept a lid on top of inflationary pressures. As a result, we may see the impact of the reduction in production cuts from OPEC+, translating into more support for the USD et heightened probabilities for an acceleration of inflationary pressures thus it may lead to further rate hikes by the central bank. Therefore, the prospect of further hikes by the Fed could put pressure on the shiny metal, making it more expensive of overseas buyers, due to its denomination in USD. Furthermore, yesterday’s US ISM manufacturing data indicated that, the manufacturing sector of the US has been slacking on multiple fronts, such as new orders, employment, prices and activity in general, echoing worries for a severe economic downturn in the US, which increases the probabilities of a recession. The bad round of manufacturing data negatively impacted the greenback, which came under significant pressure et gold capitalized on that very weakness, pared losses and closed strongly in the greens. Also yesterday, St. Louis Fed President Bullard commented on the production cuts by OPEC+, explicitly stating that it makes “the Fed’s job of lowering inflation more challenging”, et signaled that more hikes may be needed to contain the potential increases in petrol prices, which could feed inflationary pressures further. Even though his tone appeared more hawkish than normal, his comments failed to contain the dollar’s fall et cap gold’s ascent. Going beyond the recent turmoil induced by OPEC+ decision to cut production and the hawkish remarks of Fed President Bullardle market now increasingly shift its attention towards the main event of the week which is due on Friday. The Non-Farm Payrolls report is expected to be the next big test for the dollar and by extend serves as a catalyst into the future outlook of the precious. Should the NFP figure match expectations for a slowdown to 240k for the 311k jobs created in the prior month we may see the greenback coming under pressure et gold receiving inflows, extending its ascent to higher ground.

Analyser la technique

XAUUSD H4 Chart

• Support: 1950 (S1), 1900 (S2), 1865 (S3)
• Resistance: 1985 (R1), 2005 (R2), 2050 (R3)

Sideways Channel Analysis and Outlook for Gold’s Price

Gold’s price seems to be moving in a sideways channel since the 27   of March unable to break either above the 1985 (R1) resistance and 1950 (S1) support levels. We tend to maintain a neutral outlook as long as the price action remains between the channel formed between 1950 (S1) and 1985 (R1) levels with the RSI indicator remaining steady near 50. Should the price action breach definitively the resistance line of 1985 (R1) that may allow for gold’s price to test resistance at the 2005 (R2) level marking a break above the upper Bollinger band range thus potentially moving even higher as it may be indicative of a bullish sentiment forming. For a bearish outlook, we would require price to make a clean break the bellow 1950 (S1) support line, aiming if not breaking also the 1900 (S2) key psychological support level.

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

The post Gold holds steady appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Subdued banking tensions boost the precious

The wide uncertainty in the global banking sector even though subsided over the past week as central banks rushed to calm investors’ nerves, kept the market on its feet, remaining on edge despite several contradicting comments from policymakers around the world.

Last week we had Fed Bullard’s speech in which it was stated that “Financial stress has been on the rise in recent days” implying that despite Treasury Secretary Yellen’s attempt to fix her previous remarks to be in line with those of Fed Chair Powel regarding providing ample liquidity to banks, it is still the opinion of Fed Bullard that “These developments have led to volatile trading in banking equities and increases in measures of financial stress.”

This underscores the structural pre–existing problems within the financial industry, pilling onto the fear that the Fed may be afraid to proceed with higher interest rates in fear of “breaking” the banks. Moreover, the shiny metal’s price was positively affected following remarks by Fed Kashkari whose tone appeared to be changing to a more dovish outlook, implying that the balance of power within the FED is now shifting as such they may decide to hold rates rather than increase in the next meeting if fears of contagion keep spreading.

Furthermore, the precious could potentially increase in price as the unscheduled emergency meeting of the Financial Stability Oversight Council, combined with an undisclosed bank tapping the Fed for $60bn in liquidity further supports that the US Banking sector is not strong and resilient.

Market Anticipates Fed’s Next Move: Potential Impact on Gold Price

After last week’s wild swingsle market’s expectations seem to have relatively calmed down as markets anticipate the next decision ou news from officials which could provide some insight into future monetary policy meetings. The possibility of the Fed, hiking interest rates further could weaken the price of gold, given the negative correlation of gold’s price with the USD. Should the Fed’s rhetoric switch back to predominantly hawkish, we could see support for USD, leading to outflows from the precious.

Analyser la technique

XAUUSD H4 Chart

• Support: 1935 (S1), 1900 (S2), 1865 (S3)
• Resistance: 1970 (R1), 2000 (R2), 2050 (R3)

Gold Price: Neutral Outlook Analysis

Gold’s price seems to be moving in a sideways channel after a correction lower from the highs of the 2000 (R1) resistance line and having broken the upwards trendline. Overall, we tend to maintain a neutral outlook as long as the price action remains between the 1935 (S1) and 1970 (R1) levels with the RSI indicator remaining steady at 50. Should the price action breach the resistance line of 1970 (R1) that may allow for gold’s price to test resistance at the 2000 (R2)  level marking a break above the midway Bollinger band range thus potentially moving even higher. On the other hand, should gold’s price stabilization be maintained we may see it making a clean break of the bellow 1935 (S1) support line, aiming if not breaking also the 1900 (S2) support level as at this point we could expect the precious to also break below the lower band of the Bollinger bands thus we may see a downward trendline forming allowing for a bearish scenario to emerge.   

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

The post Gold faces a market correction appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

We make a start with the crash of Credit Suisse. The Swiss bank despite getting CH ₣50 billion helping hand from the Swiss National Bank was not able to survive.  

Over the weekend the Swiss authorities persuaded UBS to pay $3.23 billion for the acquisition of Credit Suisse following its spectacular drop of 26% within 5 days. It should be noted that the Swiss shareholders were favoured over bondholders an unusual first which rose substantial criticism for the actions of the Swiss Government, yet overall the deal seemed to allow for a relative easing of the market’s worries.

On the flip side, following the announcement of the deal President of the ECB Christine Lagarde said “I welcome the swift action and the decisions taken by the Swiss authorities. They are instrumental for restoring orderly market conditions and ensuring financial stability”. Following the historic merger, a shocking joint statement was made by the FED, BoC, BoE, BoJ, SNB and the ECB where it was announced that the swap lines between the Banques centrales “will allow the central banks of the eurozone, Britain, Japan and Canada to each day offer seven-day dollar loans to their banks.”

Overall the common stance and decisiveness of central banks not to allow another “2008 meltdown” momentum to be created in the banking sector tended to reassure the markets further. Yet there is still a fragile state, where a number of banks are still wobbling, with an example being First Republic bank in the US, yet there are still many more with cumulative assets over a trillion US$.

The wide uncertainty in the US banking sector and the criticism for the Feds’ aggressive rate hiking path and lax supervision, tended to alter the market’s expectations for its interest rate decision tomorrow. After wild swings in the past week, the market’s expectations seem to solidify at a 25 basis points rate hike and its characteristic that currently, Fed Fund Futures imply a probability of almost 83% for such a scenario to materialize. Anything more could provide substantial support for the USD and weaken gold’s price while should the bank remain on hold we may see the USD weakening substantially.

Besides the interest rate decision as such, we also intend to focus on the forward guidance provided in the accompanying statement and should the bank ease its so far aggressive hawkish stance we may see the greenback slipping, thus benefitting gold’s price. Also, we would like to see whether the bank will be issuing additional measures to stabilise the banking sector for example a possible guarantee for depositors.

Furthermore, the new dot plot is to show us whether the Fed’s policymakers are expecting the terminal rate to be higher than in the last one and should that be the case that could be considered an additional bullish sign for the USD and vice versa for gold’s price. Last but not least we note the release of the Fed’s projections for the course of the US economy and should the bank’s view be that a possible recession is to be avoided or even be a shallow one, we may see the USD rising and gold’s price slipping.

Analyser la technique

XAUUSD H4 Chart

• Support: 1965 (S1), 1937 (S2), 1907 (S3)
• Resistance: 2010 (R1), 2045 (R2), 2075 (R3)

Gold’s price seems to be stabilizing after a correction lower from the highs of the 2010 (R1) resistance line. Overall, we tend to maintain a bullish outlook as long as the price action remains above the upward trendline incepted since the 9   of March, yet we note that the upward trendline is now being put to the test by the price action bringing the precious metal to a make or break position.

Also note that the RSI indicator retreated from the highs of the reading of 70 and is currently near 58, allowing for an assumption that the bulls seem to be easing their grip on the market sentiment for Gold’s price.

Should the price action bounce on the upward trendline and breach the resistance line of 2010 (R1) that would allow for gold’s price to peak at a level above it marking a higher peak than the last and allowing the upward motion to continue uninterrupted for now. Next possible stop for the bulls should the R1 be broken could be set at the 2045 (R2) resistance level.

On the other hand, should gold’s price stabilisation be maintained we may see it breaking the prementioned upward trendline in a first sign of a changing trend, while should reverse direction and break the 1965 (S1) support line, aiming if not breaking also the 1937 (S2) support level, we may see a downward trendline starting to form allowing for a bearish scenario to emerge.   

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Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

The post Gold’s price reaches almost record highs appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

SVB’s fallout scatters money markets projections

Market consensus about the Fed’s hiking path forward radically changed since last week. Following Fed Chair Powell’s comments, the market shifted their outlooks reflecting the hawkish prospects of the Fed, once the door for a larger magnitude hike sprung open. As a result, we saw the market shifting their projections, bracing for 50 basis points hike in the March meeting. As soon as the SVB’s collapse headlines hit however, the market quickly downgraded their projections for the 50 basis points hike and opted for a 25 basis points hike scenario, reverting to pre-Powell speech expectations. After the weekend and the Federal Reserve, FDIC and the Treasury Department’s joint decision to step in and ensure that depositors would get back their money back, we saw a complete 180 degree turn from the market, dismissing the 25-basis points scenario all together and ended up pricing in that the Fed would stay on hold in the March meeting. Earlier today the market was split equally between no hike et 25 basis points scenarios in anticipation of the inflation report. The underlying message from these observations is that the market has no clue on what’s to follow as we inch closer to the Fed meeting and further developments from the SVB case alongside the results from crucial US related data may be needed for more accurate assessments.

Fed deploys BTFP protection mechanism to stifle contagion

Over the weekend the FED, FIDC et Treasury Department traversed extraordinary lengths to maintain stability et contain undue panic within the market and decided to go forth with the decision to protect uninsured SVB depositors’ money. Furthermore, the Fed announced the creation of its new lending program for banks, dubbed the Bank Term Funding Program ou BTFP in short. The facility will allow banks to “take advances from the Fed for up to a year by pledging Treasurys, mortgage-backed bonds and other debt as collateral. By allowing banks to pledge their bonds, they can meet customer withdrawals without having to sell their bonds at a loss, which is what Silicon Valley Bank did last week, sparking a run on the bank” WSJ reported.

Monster moves in bond yields boost inflows towards the precious

Bond yields were on a free fall mode for the past four days, with the US 2-year yield nose diving in extraordinary fashion by more than 100 basis points, from 5.07% peak formed last Tuesday and finding support around the 4% level. Similarly, the benchmark US 10-year treasury yield eased towards the 3.5% mark, down by more than 50 basis points for the same period. These erratic moves reflect the market worries for a possible spillover from the SVB’s collapse into the entire banking industry and as a result investors fled to safety, diverting significant inflows towards the precious. Hence, we observed gold’s price pivoting from the low $1800’s and soaring past the key psychological level of $1900 within three sessions, recording an incredulous 5.5% gain. Should fears for contagion persist et bond yields keep moving south, we may see gold’s price being propelled higher, closer to early February’s peak.

CPI print underscores the stickiness of inflationary pressures

Earlier today the latest US CPI print showcased that inflationary pressures have eased but remain well above the central bank’s 2% target. Both the month-on-month and the year-on-year headline CPI rates matched expectations, reported at 0.4% and 6.0% respectively, confirming the slowdown, however the Core CPI rate beat forecasts and rose to 0.5%, above market expectations of 0.4% and broadcasted once again the stickier nature of inflationary pressures. These results prior to SVB’s collapse would have most likely pushed markets to expect the 50 basis points hike from the Fed, however, taking into account the fallout of the Silicon Valley Bankle FFF currently assigns a 85% probability in the scenario where the Fed hikes by 25 basis points. The results had minimal effect on the greenback, however the gold gained traction despite the jump of bond yields intraday and left analysts puzzled. Nevertheless, market participants will turn their attention towards Fed Governor Bowman’s comments later today who is conveniently the first Fed official to speak post the SVB mayhem and may drop some hints in regards to the Fed’s intentions.

Analyser la technique

XAUUSD H4 Chart

• Support: 1900 (S1), 1885 (S2), 1870 (S3)
• Resistance: 1915 (R1), 1930 (R2), 1945 (R3)

Looking at XAUUSD 4-hour chart we observe gold’s monster move demolishing all of our prior resistance levels, as investors’ confidence was shaken by SVB’s fallout and led them to flee towards the precious to safeguard themselves from another contagion. We hold a bullish outlook bias for the bullion given the ascending channel and since worries for a spillover continue to circulate the market. Supporting our case is the RSI indicator below our 4-hour chart that currently registers a value of 77, highlighting the extreme bullish sentiment that surrounds the precious metal. Yet we would like to point out that the move has been excessive as clearly seen by the multiple breaks above the upper bound of the Bollinger band, hence we would like to highlight the scenario of a possible correction lower in the short term or at the very least a period of consolidation. Moreover, worth pointing out is that the 100 period Moving Average appears to be on track to break above the 200 period Moving Average, and should that be the case the formation of a golden cross could signal to the bulls that more upside is expected. Should the bulls continue to dominate, we may see the break above the 1915 (R1) closest resistance level and the move closer to the 1930 (R2) resistance barrier. Also should extreme volatile conditions continue to plague the market we may see the price action rising higher, closer to the 1945 (R3) crucial resistance level. Should on the other hand, the bears take the initiative, we may see the break below the ascending channel, the definitive break of the 1900 (S1) support level and the move lower close to the 1885 (S2) support base. In extreme volatile conditions we may also see the price fall to lower ground and close in the 1870 (S3) support base.

Avertissement :
Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

The post SVB-induced chaos nudges investors to pile into gold appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Fed Chair Powell’s testimonies capture the market’s attention

Today Tuesday the 7   of March and tomorrow Wednesday the 8  , market participants will shift their attention towards Fed Chair Powell’s speeches at the Senate Banking Committee and House of Financial Services Committee respectively, seeking for clues as to how high the bank will raise rates to tackle the inflationary problem. The head of the Federal Reserve will testify at the hearing on the central bank’s semiannual monetary policy report and according to a WSJ article Powell “will likely be asked by lawmakers if a half percentage-point move is under consideration”. Currently the according to the latest FFF, the market assigns a 77% probability to the scenario where the central bank proceeds with a 25-basis points rate hike in the March meeting. Should the Chairman signal that a 50-basis points hike is a possibility and delivers his message with a hawkish resolve, that will force the market to readjust its stance, hence we may see the dollar receive inflows which might it turn cause the precious to relent some of its recent gains. The prospects for tighter financial conditions from the Fed, dampen the appeal of the shiny metal in the eyes of investors. Throughout last week, several FOMC policy makers expressed their views on how the bank should proceed going forth, taking into account the latest round of economic data. San Francisco Fed President Daly over the weekend commented “restoring price stability is our mandate and it is what the American people expect. So, the FOMC remains resolute in achieving this goal,” adopting a hawkish stance, siding with a more aggressive response as the latest PCE data pointed out that inflation is not subsiding as quickly as one hoped. Minneapolis Fed President Kashkari stated that he remains “open minded” and prefers over-tightening rather than under-tightening when it comes to monetary policy actions. Fed Governor Waller pointed out that a resilient employment market, strong consumer spending tendencies and hotter than anticipated inflation is not reflecting “moderation” or evidence for a cooling economy, stating “we cannot risk the revival of inflation”, signaling that more must be done.

Crucial US employment report to make or break gold

This Friday the market will be forced to grapple with the latest employment results for the month of February, following last month’s blowout report that drove traders to downsize their overoptimistic speculative bets for a less hawkish Fed, which yielded significant inflows towards the greenback and tarnished the precious. According to forecasts the market expects the Non-Farm Payrolls figure to ease to 200k this month, following the incredulous 517k newly created jobs in the month of January. Should the actual figure match the expectation we may see the dollar coming under pressure and in contrast see gold receive support. Worth pointing out nonetheless, is that the 200k employment figure expectation falls in line with historical averages, implying that the US labour market remains robust and showcases its ability to stand strong amidst a high interest rate environment. Turning our attention towards the unemployment rate expectation, the market consensus sees the rate holding steady at 3.4%, near record lows which validates the view for a resilient US employment force. In regards to the year-on-year average hourly earnings rate, the market forecasts an acceleration of the rate to the 4.7% from the 4.4% of the prior month and should the actual rate meet expectations that would practically reaffirm that inflationary pressures pose a systemic risk in the US economy, providing therefore support for the dollar and placing pressure on the shiny metal. Overall, the results are expected to provide support in the Fed’s case for pressing on with more rate hikes since the employment market has yet to show any cracks, allowing the central bank to focus solely at keeping the inflation monster suppressed and under control, disallowing it from becoming deeply entrenched in the US economy. Should we see the NFP figure exceed expectations, that would reinforce the view for a hawkish policy response from the Fed and hurt the precious, since the prospects for tighter financial conditions dampen the appeal of the shiny metal. On the contrary should the NFP figure fail to live up to expectations, we may see the bullion glisten in the eyes of investors.

Analyser la technique

XAUUSD H4 Chart

• Support: 1835 (S1), 1820 (S2), 1805 (S3)
• Resistance: 1855 (R1), 1870 (R2), 1890 (R3)

Looking at XAUUSD 4-hour chart we observe that gold broke past the descending channel on the 28   of February and soared higher, peaking around the 1855 (R1) resistance level and is currently attempting consolidation near the 100- and 200-day moving averages. We hold a sideways bias given that the price action has broken below the ascending trendline initiated since the 28   of February, with its price action being confined between the 1835 (S1) and 1855 (R1) levels. The RSI indicator currently registers a reading of 51, showcasing indecision surrounding the commodity. We would also like to point out that today’s and tomorrow’s scheduled speeches by Fed Chair Powell alongside the crucial NFP report on Friday, can sway the markets views and create Volatilité for the shiny metal’s price, depending on the comments and contents respectively. Should the bulls take initiative and guide the price of gold, we may see the definitive break above the 1855 (R1) resistance level and the move near the 1870 (R2) resistance barrier. Under extremely volatile conditions we may see the price climb higher, near the 1890 (R3) level. Should on the other hand bears dominate, we may see the break below the 1835 (S1) support level and the move near the 1820 (S2) support base. Similarly, we note that under extremely volatile conditions we may see gold plunging even lower, closer to the 1805 (S3) support level.

Avertissement :
Ces informations ne doivent pas être considérées comme un conseil ou une recommandation d'investissement, mais uniquement comme une communication marketing.

The post Gold rallies despite rising bond yields appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.