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MTrading Team • 2023-11-01

Gold remains bearish as markets await US data, FOMC decision

Gold remains bearish as markets await US data, FOMC decision

The Fed day appears showing the routine pre-event anxiety and joins the Gaza woes, as well as the fresh fears about China’s economic recovery, to defend the US Dollar. However, other currencies and commodities, except for the JPY, seem less interesting amid a light calendar during the early part of the day.

That said, Japan policymakers’ verbal intervention weighs on the USDJPY while CHF appears the second-best performing G10 currency versus the Greenback. Further, EURUSD and GBPUSD remain lackluster after a downbeat day.

Elsewhere, Crude Oil recovers from a three-week low while the Gold price remains pressured for the third consecutive day. Also, the US stock future print mild losses and the Asia-Pacific shares edge lower.

However, BTCUSD and ETHUSD print minor losses as crypto bulls take a breather while reassessing the odds of early spot ETF approvals and fewer hardships from the US SEC.

Following are the latest moves of the key assets:

  • Brent oil recovers from a three-week low, snapping two-day losing streak around $86.70 by the press time.
  • Gold price stays defensive around $1,980 during a three-day downtrend.
  • USD Index prints minor gains around 106.70 after a downbeat start to the week.
  • Wall Street closed with mild gains but the Asia-Pacific stocks edged lower. However, equities in Europe and the UK are slightly positive of late.
  • BTCUSD and ETHUSD both pare recent gains around $34,500 and $1,800 as we write.
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Gold bears keep control despite sluggish markets

Gold remains pressured despite upbeat physical demand as the early-week China data failed to inspire optimists while the hawkish Fed bets and the geopolitical woes underpin the US Dollar’s strength. That said, the US Dollar edges higher as data/events outside the US appear less impressive while Israel’s ground invasion in Gaza keeps hammering military groups like Hamas and Hezbollah.

Talking about the data, the first readings of Eurozone inflation, per the Harmonized Index of Consumer Prices (HICP), eased to 2.9% YoY for October versus 3.1% expected and 4.3% prior. Further, the preliminary prints of the bloc’s Gross Domestic Product (GDP) for the third quarter (Q3) also eased to -0.1% QoQ and 0.1% YoY versus 0.1% and 0.5% respective priors. On the same line, Germany’s Retail Sales for September also slumped to -4.3% from -2.3% previous readings.

At home, the US S&P/Case-Shiller Home Price Indices for August rose by 2.2% YoY from 0.2% prior and 1.6% market forecasts while the Conference Board’s (CB) Consumer Confidence came in 102.6 versus 100.5 expected and upwardly revised prior figure of 104.30. That said, Chicago PMI for October dropped to 44.0 from 44.1, versus 45.4 reported in September. Additionally, the New York Fed released its version of the US inflation via Multivariate Core Trend (MCT) inflation measure on Tuesday that showed the price pressure increased in September to 2.9% from 2.6% prior. The same bolstered the hawkish Fed concerns and joined the geopolitical woes to underpin the US Dollar’s rally.

It should be noted that the World Gold Council’s (WGC) latest report showed a 14% YoY rise, or 800 tonnes, in the physical gold buying during the first nine months of 2023, as well as 181 tonnes of buying from China, and highlighted the increase in the bullion demand. The same, however, failed to defend the XAUUSD bulls for long amid the firmer US Dollar and the yields.

Elsewhere, talks about the Bank of Japan’s (BoJ) scheduled bond buying to maintain the 10-year JGB yields under 1.0% put a floor under the Yen and prod the US Dollar, which in turn tests the XAUUSD bears.

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

US ADP, ISM can entertain traders before FOMC

Moving on, the US ADP Employment Change for October and the ISM Manufacturing PMI for the said month will entertain traders ahead of the US Federal Reserve (Fed) monetary policy decision. That said, the Fed is likely to keep the rates hike but the policymakers and the recent inflation signals from the US have clearly signaled the need for one more rate hike in 2023 before promoting the policy pivot. The same could keep the US Dollar firmer even if the US central bank keeps the monetary policy unchanged.

It’s worth mentioning that there is no press conference from Fed Chair Powell and hence the MPC Statement will be crucial to watch. Should the policy statement promote a December hike, the US Dollar will forget the status quo and could rise on the hawkish expectations.

May the trading luck be with you!