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MTrading Team • 2024-04-23

Gold sellers attack short-term key support with eyes on global activity data

Gold sellers attack short-term key support with eyes on global activity data

Global markets remain dicey early Tuesday, after a sluggish start of the week, as traders await the first readings of April activity data for major economies. In addition to the pre-data anxiety, an absence of Fed talks and a light calendar also contributed toward restricting the market moves of late.

With this, the US Dollar lacks clear directions after rising in the last two weeks while the EURUSD struggles to defend the previous week’s recovery, rising recently on upbeat German and EU PMIs. That said, GBPUSD also picks up bids ahead of the UK PMIs while USDJPY traces upbeat yields despite lacking upside momentum at the highest level in 34 years.

Further, AUDUSD and NZDUSD lick their wounds while USDCAD prods the bears amid lackluster Oil prices. Moving on, Gold price remains pressured at the key $2,310-05 support confluence comprising the 21-day Exponential Moving Average (EMA) and a two-month-old rising trend line.

It should be observed that the equities edge higher while yields seesaw within a weekly trading range.

BTCUSD and ETHUSD reverse the week-start gains backed by news of a record fall in Bitcoin mining fees, especially amid an absence of encouraging news from the crypto market.

Following are the latest moves of the key assets:

  • Brent oil defends the week-start rebound near $87.70, up half a percent intraday by the press time.
  • Gold price drops for the second consecutive day to refresh a two-week low, down 0.72% on a day near $2,310 at the latest.
  • USD Index stays depressed within a weekly trading range near 106.00 as we write.
  • Wall Street closed on the positive side and the Asia-Pacific stocks also edged higher. Further, the shares in Europe and the UK post minor gains during the initial hour.
  • BTCUSD and ETHUSD both reverse the previous day’s gains by falling to around $66,200 and $3,160 at the latest.
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US Dollar lacks momentum amid Fed blackout, mixed sentiment…

Be it an absence of major risk-negative headlines or a two-week blackout period for the Federal Reserve (Fed) officials, not to forget a light calendar on Monday, the US Dollar justifies all by staying within a one-week-old trading range. In doing so, the Greenback fails to appraise the market’s hawkish bias for the US central bank and the US-China jitters. That said, the Wall Street Journal (WSJ) came out with the news suggesting that the US is drafting sanctions that threaten to cut some Chinese banks off from the global financial system.

On Monday, the Eurozone’s flash reading of Consumer Confidence for April improved to -14.7 from -14.9, versus -14.4 expected, but failed to inspire EURUSD bulls amid dovish remarks from the European Central Bank (ECB) officials. Cyprus Central Bank Governor and the ECB Governing Council Member Christodoulos Patsalides stated, “The central bank decisions are reliant on data.” Further, Germany’s Industrial body BDI said that (German) production figures have been showing a worrying downtrend for years.

Meanwhile, GBPUSD refreshed its yearly low during a three-day losing streak on Monday, and remains pressured around the five-month low by the press time, as doubts about the UK’s economic recovery contrast with the Bank of England’s (BoE) hawkish bias.

USDJPY seesaws at the highest level since 1990 despite upbeat Japan PMI for April. In doing so, the Yen pair justifies dovish bias among the Bank of Japan (BoJ) officials. It should be noted that the first readings of Japan’s Jibun Bank Manufacturing PMI for April rose to 49.9 from 48.2 while the Services PMI improved to 54.6 versus 54.1 previous readings. That said, BoJ Governor Kazuo Ueda mentioned, “Trend inflation is still somewhat below 2%, so need to maintain accommodative monetary conditions for the time being.” On the same line, early readings of Japan’s underlying inflation conditions suggest easing price pressure in March and hence defend the BoJ’s accommodative policy.

On the other hand, AUDUSD defends a corrective bounce from the yearly low even as Australian economics print mixed outcomes. The reason could be linked to the market’s cautious optimism amid an absence of major risk-negative headlines from the Middle East, as well as due to hopes of witnessing more stimulus from Australia’s biggest customer, namely China. That said, the flash readings of Judo Bank PMIs for April reported mixed outcomes as the Manufacturing and Composite PMIs improved to 49.9 and 53.7 from 47.3 and 53.3 respectively while Services PMI eased to 54.2 versus 54.4 prior. Further, the weekly prints of ANZ-Roy Morgan Australian Consumer Confidence dropped to the lowest level in 2024, to 80.3 from 83.5 prior.

It should be noted that the USDCAD snaps a five-day losing streak despite lacking recovery momentum while NZDUSD takes offers to reverse the week-start recovery amid the downbeat performance of commodities. Moving on, USDCHF edges higher while defending the previous day’s recovery despite the Swiss National Bank’s (SNB) increase in the ratio for minimum reserve requirement for banks, from 2.5% to 4.0%.

Gold price drops to the lowest level in two weeks whereas crude oil defends the previous day’s corrective bounce amid receding geopolitical fears and mixed headlines about energy demand from the major customer China.

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

PMIs are the key…

Looking forward, the preliminary PMIs for April from the Eurozone, the UK and the US will be crucial to determine intraday moves of the market. Also important will be the US New Home Sales for March and the Richmond Fed Manufacturing Index for April.

It should be noted that the market’s recent consolidation is likely to continue ahead of Friday’s US Core PCE Price Index, also known as the Fed’s preferred inflation gauge. However, any surprise outcomes from the PMIs, mostly to the downside ex-US, could help the US Dollar to remain firmer and weigh on the prices of Gold, crude oil and EURUSD the most.

May the trading luck be with you!