Gold marches toward $2,100 amid downbeat US Dollar, cautious optimism

Global markets remain dicey during the year-end holiday season, especially amid a light calendar and off in the UK, Europe, Canada and Switzerland. Even if US trading resumes after a long weekend, the traders’ participation is likely to remain muted as last week’s data failed to defy the dovish Fed expectations. The same exerts downside pressure on the US Dollar while allowing the commodities and Antipodeans to edge higher.

It’s worth noting, however, that the GBPUSD struggles to pick up bids amid the downbeat UK economics and receding hawkish expectations from the Bank of England (BoE). That said, the downbeat yields keep the USDJPY pair on the bear’s radar while EURUSD also lacks major bullish bias.

That said, the Gold buyers cheer a successful upside break of the $2,055 resistance while Crude Oil picks up bids to extend the previous two-week recovery. Further, stocks in the Asia-Pacific zone portray consolidation after a bullish 2023, tracing the mixed Wall Street closing.

BTCUSD and ETHUSD pare the previous weekly gains amid the year-end positioning, as well as due to the mixed feelings about the spot ETF approvals.

Following are the latest moves of the key assets:

• Brent oil remains mildly bid around $79.10 by the press time, defending the previous two-week rebound.
• Gold price stays firmer at the highest level in three weeks, up 0.50% near $2,065 at the latest.
• USD Index holds lower grounds near 101.60 as we write, licking its wounds at the lowest level since late July marked on Friday.
• Wall Street closed mixed but the Asia-Pacific stocks edged lower.
• BTCUSD and ETHUSD drop more than 1.0% each to near $43,700 and $2,300 amid the year-end consolidation as we write.

Dicey markets fail to trigger US Dollar’s rebound…

US Dollar Index (DXY) remains pressured at the five-month low despite the mixed US data, as well as growing confirmations of fewer Fed rate cuts in 2024. The reason could be linked to the downbeat inflation clues, as well as softer housing market numbers and the traders’ optimism about the global economic transition after a series of hawkish moves by major central banks.

With this, the DXY stays mildly offered at the lowest level since late July and allows Gold buyers to cheer the sustained upside break of the $2,050-55 resistance region. Adding strength to the XAUUSD upside could be the hopes of witnessing more stimulus from China and upbeat Indian economics. Further, the crude oil remains in the recovery mode amid geopolitical fears surrounding the Red Sea. In doing so, the commodities ignore news alleging Iran for a drone attack on a chemical ship in the Indian Ocean.

That said, the EURUSD prints mild gains as the European Central Bank (ECB) officials struggle to defy the rate cut talks amid softening inflation from the bloc. On the same line is the GBPUSD pair as the UK’s recession woes gain more acceptance while the BoE officials appear to have a hard time justifying their hawkish bias.

Further, the USDJPY holds lower ground as the Bank of Japan (BoJ) Governor Kazuo Ueda signals the readiness to exit the ultra-loose monetary policy if needed.

It should be noted that the 18-month high of Iron Ore, Australia’s key export earner, joins the broadly softer US Dollar to underpin the AUDUSD run-up whereas the NZDUSD also cheers cautious optimism in the Asia-Pacific zone despite mixed views of the Reserve Bank of New Zealand (RBNZ) officials.

Elsewhere, crypto buyers take a breather as industry players keep fighting the US SEC despite the optimism surrounding the spot ETF approvals.

• Strong buy: USDCAD, USDJPY
• Strong sell: Crude Oil, US Dollar, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

Nothing major to watch despite US traders’ return…

Although the US traders will be back on the floor after a long weekend, a light calendar and holidays in other major bourses will restrict the market moves. Also, mixed feelings about the Fed’s next moves and mostly downbeat data can add strength to the bearish bias about the Greenback. As a result, the riskier assets may keep the latest run-up while the others could end 2023 on a negative note. Even so, the US Housing Price Index will join activity data from the Federal Reserve banks of Dallas and Chicago to entertain the intraday traders and can also offer the DXY’s corrective bounce, in the case of upbeat data, amid thin trading.

May the trading luck be with you!