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MTrading Team • 2023-10-02

Gold drops to seven-month low despite no US government shutdown

Gold drops to seven-month low despite no US government shutdown

Trading sentiment remains bleak despite mildly bid US stock futures and a mixed performance of the Asia-Pacific equities. The reason could be linked to the market player’s lack of optimism in the US policymakers’ ability to keep the government offices open for long despite avoiding immediate shutdown. Further, concerns about China and the Eurozone, as well as cautious mood ahead of the key data/events, also keep the traders on their toes and propel the US Dollar, which in turn drowned the Gold Price.

That said, the US Treasury bond yields edge higher while the Oil price also extended the previous week’s retreat amid a cautious start to the NFP week.

EURUSD and GBPUSD lick their wounds at multi-day lows while an improvement in the Swiss data allows USDCHF to better consolidate the latest run-up.

Moving on, USDJPY refreshed its yearly peak before the latest inaction amid fears of Japanese government intervention to defend the Yen whereas AUDUSD failed to recover on downbeat data at home, as well as Chinese woes.

On a different page, BTCUSD and ETHUSD seesaw at six-week highs as crypto market optimism from the ETF Futures faded.

Following are the latest moves of the key assets:

  • Brent oil stays defensive at around $93.00, challenging the previous week’s U-turn from a yearly high.
  • Gold price declines to the fresh seven-month low of around $1,840.
  • USD Index extends the previous day’s rebound to 106.20 as we write.
  • Wall Street closed mixed and the Asia-Pacific stocks also edged higher. With this, equities in Europe and the UK remain inconclusive at the latest.
  • BTCUSD and ETHUSD trade firmer to around $28,300 and $1,730 as we write.
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Mixed mood avoids Gold

Although the US politicians managed to avoid the catastrophic government shutdown with a last-minute to lift the debt ceiling, the market’s optimists remain skeptical of the 45-day stop-gap funding and hence keep their money on the US Dollar. It should be noted that the latest data from the US has been supportive of the Fed’s “higher for longer” rate bias and defends the Greenback’s allure. The same joins more hardships for China’s Evergrande and economic concerns about the Eurozone and the UK to weigh on the Gold Price.

Additionally, softer prints of China’s official PMIs for September and Aussie inflation clues contribute toward exerting downside pressure on the XAUUSD, as well as souring the mood. It should be noted that the firmer prints of Swiss Retail Sales, Japanese business confidence and fears of Tokyo’s meddling to defend the Yen allowed the CHF and the JPY to print gains against the US Dollar while other major currencies dwindled.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

US ISM PMI, Fed Chair Powell’s speech eyed

It’s a busy week ahead with multiple top-tier data/events starting with the US ISM Manufacturing PMI and Fed Chairman Jerome Powell’s speech. That said, the optimism among the US traders, due to avoidance of the government shutdown, may allow the markets to consolidate the latest moves. However, the overall favor for the US Dollar and the likely weakness of the Gold can’t be ruled out.

May the trading luck be with you!