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MTrading Team • 2024-02-23

Gold pares weekly gains amid downbeat US Dollar, cautious optimism

Gold pares weekly gains amid downbeat US Dollar, cautious optimism

The risk complex remains upbeat after gaining notable strength during the week, which in turn weighs on the US Dollar even as the Federal Reserve (Fed) officials push back rate cut expectations. Also keeping the traders hopeful are the recent gains of the technology shares despite upbeat Treasury bond yields.

With this, the Gold price braces for the first weekly gains in three while crude oil struggles to keep the two-week uptrend. That said, AUDUSD justifies its risk-barometer status and the NZDUSD is also up for notable weekly gains.

It should be noted that the USDCAD lacks momentum amid downbeat Canadian inflation and activity data, as well as the Bank of Canada’s (BoC) dovish signals.

On the same line, GBPUSD and EURUSD also eye the first weekly score amid the broadly downbeat US Dollar and the central bankers’ defense of the “higher for longer” rate policies.

Alternatively, USDJPY stays on the bull’s radar as the Bank of Japan (BoJ) officials defy rate hike chatters.

Elsewhere, BTCUSD eyes to snap four-week uptrend despite refreshing a multi-month high earlier in the week whereas the ETHUSD stays on the front foot for the fourth consecutive week even as the daily losses are in line.

Following are the latest moves of the key assets:

  • Brent oil snaps two-day winning streak while posting minor losses around $83.20 by the press time.
  • Gold price pared the first weekly gain in three while extending the previous day’s retreat from 50-SMA to around $2,020 at the latest.
  • USD Index appears set to snap a five-week uptrend, dicey near 103.90 as we write.
  • Wall Street closed with gains while Asia-Pacific stocks edged higher. Further, the shares in Europe and the UK trade mixed during the initial hour.
  • BTCUSD and ETHUSD both stay pressured to around $51,100 and $2,940 while extending the early-week retreat from the multi-month high.
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US Dollar fails to justify hawkish Fed talks…

Growing concerns about the Federal Reserve’s (Fed) defense of the higher rates and mostly upbeat US data allowed the US Treasury bond yields to remain firmer. However, the Greenback failed to trace the bond coupons as risk-on mood in equities and traders' preparations for Fed rate cuts in June appear challenging the US Dollar bulls.

The same joins mostly hawkish European Central Bank (ECB) meeting accounts and an improvement in the PMI data to put a floor under the EURUSD price, allowing it to post the weekly gains. On the same line, the GBPUSD also remains firmer even as the British data challenge the Bank of England’s (BoE) hawkish rhetoric.

On a different page, the headlines suggesting a likely ceasefire in Gaza and the global pressure toward taming the geopolitical tension in the Red Sea also challenge the US Dollar’s haven demand and allow commodities including Gold to edge higher. It’s worth observing that a jump in the US oil inventories and fears of higher supply, as well as slower demand, challenge the Oil buyers.

Talking about cryptos, the ECB’s dislike for Bitcoin joined the market’s consolidation to weigh on the BTCUSD price at the multi-month high. However, the on-chain data for Ethereum allowed ETHUSD to stay firmer for the fourth consecutive week.

  • Strong buy: USDCAD, USDJPY
  • Strong sell: Crude Oil, US Dollar, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold

German data, Fed report eyed…

A slew of German data including GDP and IFO sentiment will entertain the traders for the day ahead of a bi-annual submission of the Federal Reserve’s (Fed) monetary policy report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services.

Should the German data keep pushing back the ECB rate cut bias, which has recently shifted to June, the EURUSD will have a reason to add to the weekly gains. However, the Fed updates need to highlight the fact that they’ve reached near the inflation target for that.

May the trading luck be with you!