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MTrading Team • 2024-01-03

Gold recovers from weekly low as US data, FOMC Minutes loom

Gold recovers from weekly low as US data, FOMC Minutes loom

Market players brace for a slew of data/events on early Wednesday as they consolidate the year-start moves amid mixed feelings. Even so, dovish Fed bias joins the China stimulus hopes to underpin bullish bias about the commodities and Antipodeans. However, the odds of witnessing the US soft landing tests the US Dollar bears of late.

That said, the US Dollar’s struggle to defend the previous day’s recovery allows EURUSD and GBPUSD to regain upside momentum despite Tuesday’s downbeat PMIs from the Eurozone and the UK. USDJPY, however, remains firmer while tracing the Treasury bond yields’ rebound whereas the USDCAD remains dicey as Oil prices stay pressured and the Bank of Canada (BoC)is more likely to announce rate cuts in 2024.

Elsewhere, Oil remains depressed at a two-week low while the Gold price snaps a three-day losing streak amid downbeat US Dollar and mixed sentiment.

It should be noted that the BTCUSD and ETHUSD both defend the latest recovery moves near the yearly high as crypto traders remain hopeful of a better 2024 due to spot ETF approvals.

Following are the latest moves of the key assets:

  • Brent oil remains pressured at a two-week low, down 0.25% intraday near $76.00 by the press time.
  • Gold price prints the first daily gains in four, up 0.15% intraday near $2,062 at the latest.
  • USD Index struggles to keep recovery from the lowest level since late July, mildly offered near 102.15 as we write.
  • Wall Street closed with mild losses and so did the Asia-Pacific stocks. Equities in the UK and Europe remain dicey during the initial hour.
  • BTCUSD seesaws near the multi-month high around mid-$45,000s while ETHUSD appears less bullish near $2,380 as we write.
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Gold regains upside momentum on sluggish US data, cautious mood

The downbeat readings of December PMIs for the top-tier economies renewed economic fears and allowed the US Dollar to begin 2024 on a firmer footing, which in turn challenged the Gold buyers the previous day.

Also likely to have challenged the XAUUSD buyers were chatters about the US soft landing and geopolitical tensions surrounding Ukraine and the Red Sea.

However, talks about China’s more stimulus and lingering demographics, as well as mixed economic recovery, also allowed the Greenback to snap a two-day winning streak and prod the Gold price downside.

Additionally, the Wall Street Journal’s (WSJ) piece suggesting fears of China’s demographic collapse due to a shocking fall in the birth rate joins the UK’s Institute of Directors (IoD) Confidence Index, which fell to -28 in December from -21 in November, to bolster the economic woes.

It should be noted, however, that the International Monetary Fund (IMF) Managing Director Kristalina Georgieva spoke on CNN and bolstered the market’s bets for the US economic growth while saying, “The Fed is achieving a soft landing.” IMF’s Georgieva also conveyed her estimates of lower inflation and rates.

Furthermore, the Atlanta Fed’s GDPNow gauge predicts a 2.0% growth rate for the US Q4 economic activity versus the previous estimate of 2.3%, which in turn prods the US Dollar bulls early on Wednesday and favors the XAUUSD rebound. On the same line could be the news that China relaxed visa restrictions for US travelers and the growing optimism about the dragon nation’s stimulus policies.

On a different page, China’s heavy quotas for Oil imports and Aussie PM’s showdown for measures to provide a 'cost of living' relief failed to gain major attention.

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

US data, Fed Minutes eyed…

The Minutes of the latest monetary policy meeting of the US Federal Reserve (Fed) will be key to watch as Fed Chair Jerome Powell bolstered calls for rate cuts in 2024 and drowned the US Dollar during late 2023. Also important to watch will be the US ISM Manufacturing PMI for December and JOLTS Job Openings for November. Should the FOMC Minutes confirm the Fed policymakers’ dovish bias, the odds of witnessing the Gold price rally toward the $2,090 resistance can’t be ruled out. Ahead of that, softer prints of the US data may test the US Dollar and will defend the Gold buyers.

May the trading luck be with you!