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MTrading Team • 2023-10-18

Gold refreshes monthly high as US Dollar ignores firmer yields

Gold refreshes monthly high as US Dollar ignores firmer yields

Market sentiment remains mostly downbeat, sluggish of late, as traders reassess the recent data from the US and China while also taking directions from the geopolitical concerns surrounding the Israel-Hamas war.

That said, Gold and bond yields rise during the uncertain markets, especially when data from China appears promising. The US Dollar, however, remains pressured for the third consecutive day and allows the Antipodeans, as well as crude oil, to remain firmer.

It should be noted that the Gold Price reached a monthly high and the crude oil jumped to the highest level in two weeks. Further, AUDUSD rose the most among the G10 currency pairs as hawkish comments from RBA Governor Bullock joined upbeat China data. Additionally, GBPUSD prints mild gains despite softer UK inflation while USDJPY remains indecisive amid firmer yields and a downbeat US Dollar.

Elsewhere, BTCUSD and ETHUSD print mild gains amid optimism surrounding Spot Bitcoin ETF approvals.

Following are the latest moves of the key assets:

  • Brent oil prints mild gains at two-week high, up 0.65% intraday near $92.00 by the press time.
  • Gold price rises for the second consecutive day to refresh the monthly high around $1,940, up 0.90% near $1,939 as we write.
  • USD Index prints three-day losing streak near 106.10 at the latest.
  • Wall Street closed mixed but the Asia-Pacific stocks, as well as equities in Europe and the UK, edged lower.
  • BTCUSD and ETHUSD pare the previous day’s losses around $28,500 and $1,570 as we write.
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US Dollar remains pressured despite mixed concerns…

US Dollar Index (DXY) prints a three-day losing streak while declining to 106.00 by the press time. In doing so, the Greenback traders pare previous weekly gains despite firmer yields and mostly upbeat data while bearing the burden of upbeat China statistics.

On Tuesday, US Retail Sales grew 0.7% MoM for September versus 0.3% expected and 0.8% prior (revised) while the Retail Sales ex Autos, also known as the Core Retail Sales, rose 0.6% compared to 0.9% (revised) previous readings and 0.2% market forecasts. Further, US Industrial Production for September rose 0.3% from 0.0% expected and prior whereas Business Inventories rose 0.4% for August versus 0.3% expected and 0.1% previous readings.

Talking about China data, China’s third quarter (Q3) Gross Domestic Product (GDP) grew 1.3% QoQ and 4.9% YoY in that order versus 1.0% and 4.4% market forecasts but came in mixed compared to the previous readings of 0.8% QoQ and 6.3% YoY respectively. Further, the Dragon Nation’s Industrial Production reprinted 4.5% YoY figures for September against 4.3% expected while the Retail Sales growth jumped 5.5% YoY from 4.6% previous readings and 4.9% market consensus. Apart from the data, China's Communist Party Leader Xi Jinping’s comments suggesting the removal of foreign investment access restrictions in the manufacturing sector also weighed on the US Dollar.

However, the International Monetary Fund (IMF) downgraded its 2023 and 2024 growth forecasts for China to 5.0% and 4.2% respectively versus 5.2% and 4.5% in that order while saying its recovery was "losing steam" and citing weakness in its property sector. The same should have prod the US Dollar bears. On the same line are comments from Federal Reserve Bank of Minneapolis President Neel Kashkari who reiterated his usual comments by stating that the inflation is still too high.

Additionally, the US Congress heightened security posture and increased police presence for Wednesday, by citing the potential for civil disturbance. The same joins concerns that US President Joe Biden will ask tough questions in Israel while meeting families of victims, hostages of the Hamas attack during his visit to test the bears.

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

Risk catalysts eyed…

Although the US housing numbers will join Fed talks to entertain momentum traders on Wednesday, major attention will be given to the headlines surrounding Israel and China as us President Biden visits Israel and Russia’s Putin is in China. Both the leaders’ comments can help determine the intraday directions of the market and can trigger the US Dollar rebound in a case where the US data and Fed talks appear positive.

May the trading luck be with you!