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Firmer USD Sends Gold Lower
Gold prices are plunging today amidst a fresh uptick in the US Dollar. The metal is now down more than 5% from YTD highs and looks vulnerable to a fresh fall lower should USD continue higher today. Uncertainty around ongoing US debt ceiling negotiations is favouring USD for now via safe-haven flows, leading to weaker prices in gold. Additionally, hawkish comments from Fed’s Bullard yesterday are also helping underpin the Dollar. Bullard voiced his support for two further hikes this year, echoing similar comments from Fed’s Logan last week while notably different from the view shared by Fed chairman Powell last week who called for a slower pace of hiking amid tighter credit conditions.
US PMIs On Watch
Looking ahead today, the main focus for gold prices will be the latest round of US factory and non-factory PMIs. Both readings are expected to come in a little weaker against the prior month. Given the lingering US recession concerns, any weakness in today’s readings will likely fuel fresh safe-haven demand for the Dollar, dragging gold prices lower near-term.
Market Forecasts
In terms of numbers, the market is looking for the services PMI to print 52.6, down from 53.6 prior with manufacturing projected at 50. Down from 50.2. In terms of market moving impact, the biggest reaction will likely be seen if either reading is seen dropping back into contractionary territory, which should see USD sharply higher and gold prices coming off.
Technical Views
XAUUSD
The correction lower in gold prices has seen the market breaking back below the 1973.51 level following an initial attempt last week. With momentum studies bearish, while below here the focus is on a further move lower. The bull channel lows will be the first support area to watch ahead of deeper structural support at the 1871.04 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.