Gold pares weekly gains around record high ahead of Powell’s speech

Although the Asia-Pacific markets remain slightly positive outside China, the overall trading sentiment remains dicey ahead of the last key event of the week, namely a speech from the Federal Open Market Committee (FOMC) Chairman Jerome Powell. Also challenging the risk appetite could be the China woes and a retreat in stocks and Gold from an all-time high.

Amid these plays, the US Dollar Index (DXY) rises to the monthly high, extending the previous day’s run-up, whereas other major currencies and commodities, as well as the Antipodeans, remain downbeat.

That said, EURUSD remains pressured at the lowest level since March even as the European Central Bank (ECB) officials push back rate cut bias. Further, GBPUSD fails to cheer improvement in the UK Retail Sales on the Bank of England’s (BoE) dovish halt whereas USDJPY retreats from a five-month high to print the first daily loss in nine days.

Moving on, AUDUSD marks the biggest daily loss among the G10 currency pairs due to its risk-barometer status and the NZDUSD follows suit while USDCAD and USDCHF grind near the multi-day high marked the previous day amid broadly firmer US Dollar and a lack of domestic catalysts.

Further, the Gold price stays defensive after reversing from the all-time high (ATH) the previous day whereas Crude oil also prints a three-day losing streak as the supply-demand matrix teases energy bears amid the upbeat US Dollar.

Elsewhere, BTCUSD and ETHUSD consolidate the second weekly loss in a row as traders await the annual crypto event in the US.

Following are the latest moves of the key assets:

• Brent oil drops for the third consecutive day to $85.50 as sellers flirt with the weekly low by the press time.
• Gold price extends the previous day’s pullback from a record high to $2,166 at the latest, down 0.70% intraday.
• USD Index rises to the highest level since March 01, bracing for the second weekly gain around 104.25 as we write.
• Wall Street closed with mild gains even after reversing from the all-time high and the Asia-Pacific stocks also edged higher outside China. Further, the shares in Europe and the UK also remain indecisive during the initial hour.
• BTCUSD and ETHUSD reverse the previous day’s losses to around $66,200 and $3,520 at the latest.

US Dollar bulls challenge Gold price upside…

The US Dollar Index (DXY) rose the most in five weeks the previous day as market players considered the Fed announcements as hawkish on the second reading, following the initial downbeat reaction. The reason could also be linked to a no change in the FOMC dot plot suggesting three rate cuts in 2024, as well as mostly upbeat prints of the US PMIs, housing and regional activity data.

As the US Dollar’s strength exerts downside pressure on major currencies and Antipodeans, the EURUSD ignores upbeat PMI data and hawkish comments from the European Central Bank (ECB) officials to poke the monthly low.

GBPUSD marked the biggest daily slump in five months, pressured around the monthly low by the press time, as the Bank of England (BoE) Governor Andrew Bailey accepted the market’s belief of witnessing rate cuts this year. It’s worth noting that the BoE left monetary policy unchanged and tried to hide the economic challenges for Britain but failed to stop the bears. In doing so, the Cable pair also justified softer UK PMIs for March while ignoring an improvement in the UK Retail Sales for February.

Further, USDCHF jumped to the highest level in four months, as well as marked the biggest daily jump in five weeks, after the Swiss National Bank (SNB) reported a surprise rate cut. The same undermined the Swiss Franc’s (CHF) currency of choice status. On the same line, USDCAD also reversed from a two-week low after the Bank of Canada (BoC) official marked

It should be noted that the AUDUSD drops the most among the G10 currency pairs as Fitch Ratings highlights the multi-month high Australian Mortgage Arrears. Also weighing on the Aussie pair could be the US Dollar’s recovery and the cautious mood ahead of today’s speech from Fed Chairman Jerome Powell. Second in line is the NZDUSD pair that traces the Aussie pair and bears the burden of a firmer Greenback, China woes and increasing odds of witnessing economic hardships in the Pacific major, per the comments from New Zealand (NZ) Prime Minister and Treasury Office in the last few days.

On a different page, Gold price rose to a fresh record high before retreating from $2,222 and closed the day on a negative note amid a firmer US Dollar, as well as the cautious mood ahead of today’s speech from Federal Reserve (Fed) Chairman Jerome Powell. Also exerting downside pressure on the XAUUSD could be anxiety ahead of the big US corporates’ China visit and a retreat in the Wall Street benchmarks from the record tops, not to forget the metal’s failure to cross the multi-month-old rising resistance line, around $2,215 by the press time.

Like gold, the prices of Crude oil also dropped amid downbeat PMIs outside the US and a firmer US Dollar. Also weighing on the black gold could be the concerns surrounding a softening energy demand amid higher rates and China woes, not to forget the chatters about the higher Oil productions outside the OPEC.

On a different page, BTCUSD and ETHUSD pare weekly losses, the second in line, as traders await keywords from the crypto influencers at the Inaugural Investor Day in the US.

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

Powell’s speech in the spotlight…

Fed Chairman Jerome Powell’s speech will be the last catalyst to watch during the volatile week that comprised a slew of central bank decisions and top-tier data. That said, a likely hawkish tone of the Fed Chair could allow the Greenback to end the week on a positive side, which in turn can join an open room toward the south for the XAUUSD to suggest the bullion’s further weakness toward the $2,148-47 horizontal support. It should be noted that Powell’s one more failure to convince the policy hawkish, like Wednesday, won’t hesitate to propel the precious metal toward a fresh record high even if the US Dollar resists welcoming the bears.

May the trading luck be with you!