Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. All opinions and information contained in this report are subject to change without notice. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. WTI Outlook: Oil Prices Extend Rebound After NFPĮUR/USD Outlook Brightened By Hawkish Lagardeĭisclaimer: The information on this web site is not targeted at the general public of any particular country. For as long as that level holds, I see any short-term weakness as just noise – and opportunity for would-be buyers. Indeed, if XAUUSD were to break its most recent low at $1969, that would weight the gold outlook in the near-term at least. I will only entertain the bearish argument if we see a clear reversal pattern. Indeed, with gold holding above $2K, the bulls are still in control of price action. Given gold’s struggles in recent days, we are in need of a fresh bullish technical signal to confirm my suspicion that the weakness is just temporary and driven, above all, by profit-taking. This could weigh further on the US Dollar Index, helping to boost the gold outlook. What’s more, China’s economic recovery appears to be fading, which was highlighted by a surprise 7.9% drop in imports on Tuesday, adding to the sluggish factory activity figures released last week.įor all of these reasons, the Fed may have to start cutting rates soon, possibly by September. The US could default on its debt obligations if no resolution is found within the next 3 weeks or so. The latest talks yesterday between President Biden and top congressional leaders over the debt ceiling impasse saw no progress. The market thinks this will come as early as September.įor another, concerns over the debt ceiling are rising and credit is tightening. But a rate cut later in the year looks favourable. ![]() What’s more, the odds of a rate cut in the same month has increased slightly, although you have to question that given Powell’s hawkish rhetoric. In fact, following the release of CPI data earlier, the market has revised its expectations of a pause in hikes in the June meeting to 85% from 78% previously. However, the Fed may soon have to cut anyway, keeping the metals supported.įor one thing, US inflation has fallen further – to 4.9% now from 5.0%, more than expected. While the market is convinced about the Fed reaching peak in terms of interest rates, the Fed Chair himself has left the door open to further rate increases, owing to a strong jobs market and still-high inflation. For that reason, I continue to expect gold reaching even higher levels in the months ahead. Given that the weaker CPI report supports the peak interest rates narrative, gold’s inability to hold onto its earlier gains was presumably driven by profit-taking as the metal again neared $2050, a level which it has struggled to get past on several occasions. However, the gains evaporated shortly after with precious metals turning lower again. Following the release of US CPI report, the US dollar initially sold off, helping to propel gold and major currency pairs higher.
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