Gold snaps five-day losing streak as US Dollar’s retreat joins mixed sentiment

Stock markets disappointed bulls but avoided entering bear territory, as traders sought confirmation of economic growth and signals from central banks. Market indecision and a light economic calendar limited momentum, keeping participants cautious.

The US Dollar Index (DXY) retreated after a two-day recovery, benefiting commodity prices and currencies like the Australian and New Zealand Dollars. However, the Euro, Japanese Yen, and Swiss Franc also gained against the weaker US Dollar, while the British Pound struggled.

USDCAD maintained a bearish trend due to a softer US Dollar combined with stronger Oil prices. Crude Oil awaited further signals after a recent increase, while Gold prices saw their first daily gains in six days amid uncertain market conditions favoring safe-haven assets.

BTCUSD and ETHUSD recovered losses for the week based on positive on-chain data, though concerns within the crypto market tempered buyer enthusiasm. Developments involving the US SEC, Donald Trump, and ETF flows continued to impact Bitcoin and Ethereum traders.

Following are the latest moves of the key assets:

• WTI Crude oil lacks clear directions while posting mild losses around $75.00 after rising the most in a week, as well as snapping four-day losing streak the previous day.
• Gold prints the first daily gain in six by rising to $2,400, up 0.74% intraday at the latest.
• The USD Index prints minor losses around 103.00 after rising in the last two consecutive days.
• Wall Street closed in the red after a positive opening but the Asia-Pacific shares drift lower. Further, equities in Britain and Europe trade mixed during the initial trading hour.
• BTCUSD and ETHUSD both rise more than 3.0% intraday to pare the weekly losses around $57,200 and $2,430 at the latest.

US Dollar fades recovery…

Traders' uncertainty about US economic growth and the Federal Reserve's future actions tested the US Dollar's recovery. Weak performances from technology giants and Disney, coupled with concerns over the Fed potentially cutting rates three times in 2024, weighed on market sentiment and the US Dollar as well.

Elsewhere, large bond sell-offs in China and the US further dampened risk appetite and challenged the US Dollar's rebound ahead of US Jobless Claims data. Positive US Mortgage Applications and modest Consumer Credit changes did little to boost the Greenback, despite reassurances from the Sahm Rule indicator's founder about recession fears.

As a result, the US Dollar Index (DXY) posted its first daily loss in three sessions after rebounding from a seven-month low earlier in the week. EURUSD recovered from earlier losses, supported by comments from ECB policymaker Olli Rehn downplaying market volatility and favorable economic data from Germany.

GBPUSD struggled to gain traction amid the US Dollar's retreat, hovering near a five-week low set on Tuesday. Concerns over the UK's economic outlook and geopolitical tensions in both Britain and the US contributed to the Cable pair's weakness, despite better-than-expected growth in British Halifax House Prices for July.

USDJPY consolidated significant gains, its largest since late April, bolstered by Japanese policymakers' comments and the Bank of Japan's Summary of Opinions, which reinforced the Japanese Yen's strength.

AUDUSD saw the largest daily gains among G10 currencies, driven by hawkish remarks from RBA Governor Bullock, the US Dollar's retreat, and China's readiness to stimulate its economy. Geopolitical concerns from China, the Middle East, and the West tempered the Aussie's rise despite active trading.

NZDUSD struggled to follow its Australian counterpart despite the US Dollar's weakness and slightly positive sentiment, as New Zealand's Inflation Expectations for the next two years challenged the RBNZ's hawkish stance. Similarly, USDCHF hesitated to rally on the US Dollar's decline amid reports urging the Swiss National Bank (SNB) to counteract the Swiss Franc's strength.

Meanwhile, USDCAD extended losses for the fifth consecutive day as a weaker US Dollar combined with higher crude oil prices, a key Canadian export, outweighed concerns raised in the Bank of Canada's recent meeting minutes about softer inflation and potential rate cuts.

Crude Oil rebounded significantly, ending a four-day decline, driven by unexpectedly low US weekly oil inventories and geopolitical tensions such as potential Iranian actions against Israel and US purchases for the Strategic Petroleum Reserve (SPR).

Gold recorded its first daily gains in six days as investors sought refuge in traditional safe-haven assets amidst global growth uncertainty and speculation about central bank actions. Support for XAUUSD's recovery also stemmed from reports suggesting potential stimulus measures in China, geopolitical tensions, and a retreat in Treasury bond yields. However, the precious metal remained in a consolidation phase, attempting to reverse gains made earlier in the month.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

US Jobless Claims, risk catalysts eyed…

Looking ahead, all eyes will be on the weekly US Jobless Claims data as the primary economic event on the calendar. This release is expected to garner significant attention and could influence market sentiment.

Given the current market indecision and a relatively quiet economic schedule, traders may experience volatile swings, especially with lighter trading volumes. This environment could solidify trends established earlier in the week, potentially bringing focus back to the US Dollar, Gold, and Japanese Yen.

Conversely, negative news developments could exert selling pressure on EURUSD, GBPUSD, and AUDUSD, as these currencies may face headwinds amid heightened risk sentiment.

Overall, geopolitical developments, economic growth indicators, and performance on Wall Street will be crucial risk factors to monitor, shaping market dynamics in the coming sessions.

May the trading luck be with you!