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MTrading Team • 2023-09-27

Gold renews monthly low amid dicey markets

Gold renews monthly low amid dicey markets

Markets remain mostly directionless, despite being a bit positive of late, as traders struggle with anxiety about the US government shutdown and the Fed’s next move amid mixed US data. Adding strength to the cautious mood could be the China concerns and a lack of major data/events.

With the dicey markets in position, trades praise the hawkish Fed talks and rush to the US Dollar for safety, which in turn exerts downside pressure on the commodities and Antipodeans. The mixed mood supersedes the upbeat Australian inflation to weigh on the AUDUSD while the EURUSD struggles amid the restrictive policy signals from the ECB and the Fed officials. That said, the GBPUSD remains depressed at a multi-month low amid the UK’s economic woes while USDJPY fails to justify a retreat in the US Treasury bond yields amid dovish comments from the BoJ and Japanese officials.

Wall Street closed in the red but the Asia-Pacific shares edged higher of late, led by China. That said, equities in Europe and the UK are also slightly positive amid the initial hour of trading.

With this, Gold Price drops to a six-week low but Crude Oil extends the previous day’s recovery.

Cryptocurrencies trade mixed as the industry players’ push for ETF approvals contrasts with a huge options expiry on the month.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s recovery around $94.20, up 0.65% intraday by the press time.
  • Gold price drops for the third consecutive day to $1,896, the lowest level in six weeks.
  • USD Index prints four-day winning streak at the highest level in 2023 around 106.25 as we write.
  • Wall Street closed with losses but the Asia-Pacific stocks edged higher. That said, equities in Europe and the UK print mild gains at the latest.
  • BTCUSD and ETHUSD trade mixed around $26,200 and $1,590 as we write
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US Dollar stays firmer amid mixed mood

Despite the mixed mood and the US data, not to forget the US government shutdown concerns, the US Dollar Index (DXY) reached the yearly high. That said, US CB Consumer Confidence and New Home Sales eased but an improvement in the S&P/CS Composite-20 HPI and Richmond Fed Manufacturing Activity Index defends the Fed hawks, as well as propelled the DXY. Among the hawkish Federal Reserve (Fed) officials, Minneapolis Fed President Neel Kashkari gained major attention as he signaled a 40% chance of ‘meaningfully higher” rates. On the same line was Fed Governor Michelle Bowman who highlighted higher rents to defend the need for restrictive monetary policy.

It should be noted that the US diplomats keep updating about good progress in the debt ceiling extension deal to avoid the government shutdown and tame the US Dollar’s haven demand. However, big banks like Goldman Sachs and JP Morgan highlight the possibility of multiple shutdowns and prod the sentiment.

China placed officials of the troubled housing company Evergrande, also the second biggest in the nation, into custody and fuelled debt woes about the Dragon Nation, which in turn prods the optimists and exerts downside pressure on the Gold price. It’s worth observing that the People’s Bank of China (PBoC) flexes muscles for more stimulus and other measures to defend the economic growth of the world’s second-largest economy, which in turn tames the pessimism. Furthermore, an improvement in China’s Industrial Profits for August also challenges the risk aversion and the gold sellers.

Elsewhere, a slew of crypto industry professionals and some of the government organizations also push the US SEC towards fastening the SPOT ETF approvals but the fears of harsh regulations keep the BTCUSD and ETHUSD bulls at bay. Also challenging the Bitcoin and the Ethereum traders is the looming heavy options expiry.

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

Risk catalysts will be the key

Moving on, a light calendar will keep the market players stuck to the risk catalysts for clear directions. Among them, the US debt ceiling deal and the Fed talks will gain major attention. Should the US policymakers announce a deal before October 01, the market sentiment may improve, which in turn can trigger a pullback in the US Dollar. However, the hawkish Fed concerns keep the Greenback buyers hopeful.

May the trading luck be with you!