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MTrading Team • 2022-11-07

Gold declines amid covid woes, indecision over Fed’s pivot

Gold declines amid covid woes, indecision over Fed’s pivot

Friday’s optimism couldn’t last long as the weekend headlines renewed the market’s fears over China’s zero covid policy. Adding strength to the risk-off mood were updates surrounding Russia and fears of higher rates.

The sour sentiment drowned prices of commodities and Antipodeans before the lackluster moves held bears tightly. Even so, equities in the Asia-Pacific region remained firmer while those from Europe witness mild losses at the beginning.

It should be noted, however, that the US dollar failed to cheer the risk aversion as Friday’s US employment data joined mixed comments from the Fed policymakers.

Elsewhere, talks of crypto consumer protection and Meta’s layoffs probe BTCUSD and ETHUSD amid a sluggish start for the e-currencies.

Following are the latest moves of the key assets:

  • Brent oil reverses the week-start losses while picking up bids to $99.00, up 0.50% intraday at the latest.
  • Gold pares Friday’s jump by declining to $1,670 by the press time, down 0.80% intraday.
  • USD Index also consolidates Friday’s losses but the greenback buyers struggle above 111.00.
  • FTSE prints mild losses but Euro Stoxx remains indecisive at the latest.
  • Wall Street reversed the four-day downtrend with nearly 1.5% gains by each of the key benchmarks.
  • BTCUSD and ETHUSD lack clear directions but stay bearish around $20,700 and $1,550 of late.
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Markets remain jittery amid a dual between bulls and bears

The covid-linked fears joined China’s first decline in exports since 2020 to challenge the market’s mood during early Monday. Even so, expectations that the global central bankers are near neutral rates calmed the bears. Adding to the market’s lack of momentum, except for the week-start gaps, is the wait for the US inflation data.

With this, the US dollar stretched Friday's losses before paring them back in the last few minutes. However, the greenback’s rebound failed to impress market players and Western equities join downbeat gold prices to market the bearish play. It should be noted that China’s dominance in gold markets exerts additional downside pressure on the XAUUSD.

Elsewhere, fears that more regulations are coming for cryptos joined the likely long run for the Fed before hitting the pivot rates to weigh on the market sentiment.

Crude oil also reversed the early-day losses and printed mild gains of late amid geopolitical concerns and the Middle East’s rejection to ease supply cuts.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Fedspeak may entertain traders

Having witnessed the latest positive news from Germany, in terms of upbeat Industrial Production data for September, comments from various Federal Reserve policymakers could entertain the traders. However, major attention will be given to Tuesday’s US mid-term elections and Thursday’s US Consumer Price Index (CPI) data amid talks of an easy rate hike in December.

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