Gold approaches yearly bottom on strong yields, pessimistic markets

Global markets remain risk-averse as multi-year high Treasury bond yields portray pessimism among traders. While tracing the mood, fears emanating from strong inflation data and central bankers’ aggressive rate hike favor gain major attention. On the same line are China’s covid woes and the UK’s political jitters.

With this, the yields underpin the US dollar’s run-up towards paring the first weekly loss in three, which in turn drowns prices of crude oil and gold amid sluggish markets. Further equities remained downbeat while Antipodeans also print mild losses.

GBPUSD led the bears among G10 major currencies as British Retail Sales data for September disappoints while the AUDUSD remains mildly offered as Aussie diplomats convey hints for the annual budget. Moving on, USDJPY refreshes a 32-year high during a slow grind to the north.

Cryptocurrencies had their fundamentals, in addition to the broadly sour sentiment, and remain pressured.

Following are the latest moves of the key assets:

• Brent oil snaps two-day uptrend to brace for the second weekly loss, down 0.70% intraday near $92.30 at the latest.
• Gold also braces for the second weekly loss as it approaches the yearly low, around $1,623 by the press time.
• USD Index remains mildly bid near 113.00 as it tries hard to avoid weekly losses.
• FTSE prints mild losses but Eurostoxx and DAX are both declining over 1.0% intraday at the latest.
• Wall Street printed its second consecutive daily loss led by S&P 500’s 0.80% fall.
• BTCUSD and ETHUSD are both directionless, trading mixed around $19,000 and $1,300 levels respectively.

Lack of data/events restrict pessimism but bears hold the line

Although the market players remain cautious, an absence of major data/events keeps them wondering during early Friday. Also challenging the trading performance could be the anxiety ahead of the key UK elections and the next week’s central bank meetings. 

Even so, riskier assets like equities and commodities remained on the seller’s radar while the US dollar cheers the rush to risk safety. Australia’s Chancellor couldn’t revive the Aussie despite suggesting measures to improve the economy while upbeat NZ trade numbers also failed to impress the buyers. Yields refreshed multi-year high as traders dump bonds amid fears of economic slowdown.

Further, UK’s Retail Sales shrank more than expected in September while GfK Consumer Confidence data improved from the record low.

Gold bears keep control even as hopes of festive demand from India and hopes of more stimulus from China suggest more buying from the biggest consumers of the yellow metal.

Elsewhere, a slump in the Metaverse trading volume and US regulators’ hints of strict policing of cryptos weigh on the prices of BTCUSD and ETHUSD.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Fed speakers are important

Although Canadian Retail Sales and Eurozone Consumer Confidence will decorate Friday’s calendar, some of the Fed policymakers are up for shooting their last hawkish arrow before the pre-Fed silence period begins this weekend. Other than the Fed speakers, risk catalysts surrounding the UK’s elections, the Russia-Ukraine crisis and China’s covid conditions could also entertain bears.

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