Gold buyers hit pause at record high as markets await Fed inflation and NFP

Market sentiment is cautious early Thursday after a wild day, despite efforts from Asia-Pacific data to attract momentum traders. This hesitation likely stems from anticipation surrounding the US Core PCE Price Index, also known as the Fed's favorite inflation measure, and Friday's October employment report, especially the Nonfarm Payrolls (NFP).

US Dollar retreats

The US Dollar Index (DXY), which measures the US Dollar against six major currencies, looks likely to end the week lower, breaking a four-week winning streak. This comes amid mixed signals on US employment and growth that do not support the Federal Reserve's (Fed) stance against significant rate cuts. Additionally, the Fed's blackout period ahead of the November FOMC meeting also adds to the DXY’s pullback.

Concerns about the impact of US hurricanes and strikes on employment and growth challenge both Fed hawks and US Dollar buyers. On Thursday, the US preliminary Q3 GDP readings showed slower growth, which weighed on the Greenback, even as the ADP Employment Change report indicated strong job gains ahead of Friday's NFP data.

EURUSD cheers upbeat EU data, GBPUSD struggles amid downbeat UK budget

The US Dollar's weakness, combined with positive growth and inflation data from the Eurozone and Germany, boosts the EURUSD recovery. Additionally, comments from European Central Bank (ECB) officials challenging expectations for major rate cuts have also supported Euro buyers.

Meanwhile, GBPUSD struggles to gain traction despite the softer US Dollar, as UK Chancellor's preliminary budget forecasts for growth and inflation did not impress the Pound buyers. Concerns over high taxes, a sluggish economy, and a lack of confidence in the new government are also weighing on the British currency.

USDJPY bulls step back on political, BoJ concerns

USDJPY has been an interesting pair after starting the week with a gap-up due to political disappointment. However, it broke a three-day winning streak early Thursday after the Bank of Japan (BoJ) kept rates unchanged, meeting market expectations. Additionally, the USD’s retreat and mostly weak data from Japan also challenge the Yen buyers.

Antipodeans, Crude Oil lick their wounds

Commodity-linked currencies like the Australian, New Zealand, and Canadian dollars, known as the Antipodeans, also struggle to benefit from the US dollar's pullback, even as they bounce back from multi-day lows. AUDUSD, NZDUSD, and USDCAD are weighed down by doubts about China's ability to stimulate demand for commodities. Additionally, disappointing data from Australia and New Zealand weigh on the Aussie and Kiwi Dollars. Meanwhile, a dovish outlook for the Bank of Canada (BoC) and falling crude oil prices drive USDCAD higher.

Crude oil experienced its biggest daily jump in three weeks but still couldn't overcome weekly losses after a significant drop on Monday due to easing geopolitical fears. However, draws in US crude oil inventories, discussions about a delay in the OPEC+ output increase, and mixed signals from Israel and Iran have helped support the recent rebound in oil prices.

Gold shines bright as buyers drive momentum

With the US Dollar’s retreat, expectations for lower rates from major central banks, and strong demand from China and India, the gold buyers are firmly in control. The precious metal is on track for its fourth consecutive week of gains, consistently hitting all-time highs, even if early Thursday shows some lack of momentum. The latest report from the World Gold Council (WGC) reveals that gold investment demand soared to its highest level in 12 years during Q3 2024, further fueling bullish sentiment among buyers.

Cryptocurrencies cheer optimism from US Presidential Elections

Like gold, Bitcoin (BTCUSD) and Ethereum (ETHUSD) have maintained their upward momentum this week, despite a slight retreat early Thursday. This reflects trader confidence that Donald Trump may win the US Presidential Elections and roll back restrictive regulations from the US SEC.

Latest moves of key assets

• WTI Crude oil struggles to defend the previous day’s heavy run-up around $69.00 by the press time.
• Gold prints mild losses near $2,785 after refreshing the all-time high near $2,790.
• The USD Index remains pressured for the fourth consecutive day, bracing for the first weekly loss in five.
• Wall Street closed with minor losses and the Asia-Pacific shares also drifted lower. Further, European and British equities stay pressured during the initial trading hour.
• BTCUSD and ETHUSD both post mild intraday losses near $72,200 and $2,640 as we write.

A slew of data/events to watch…

Market participants can expect increased volatility on Thursday and Friday with significant data from the Eurozone and the US set to be released. On Thursday, the US Core PCE Price Index, the Fed's favored inflation measure, will be alongside Eurozone inflation data and US Jobless Claims, to attract momentum traders. Then on Friday, all eyes will be on China's Caixin Manufacturing PMI, the US ISM Manufacturing PMI, and the crucial October employment report, including Nonfarm Payrolls (NFP).

Concerns about disappointing US jobs and activity data have pressured US dollar bulls, but a positive surprise in the statistics could spark a recovery for the Greenback. Such a shift might also lead to a pullback in EURUSD, especially as disinflation in the Eurozone receives limited support from ECB officials, hinting at potential rate cuts from the region's central banks.

Gold is likely to stay firm, supported by rising investment demand, China's stimulus, and ongoing global market uncertainty. However, any rebound in the US dollar could challenge bullish momentum, making it tough for gold to break through the recent resistance level of $2,800.

Predictions for Key Assets

• Recovery Expected: USDCAD, USDJPY, US Dollar, Silver
• Further Downside Likely: AUDUSD, NZDUSD, GBPUSD
• Mostly Sideways Expectations: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Slow & Gradual Fall Expected: DAX, FTSE 100, EURUSD, Crude Oil

May the trading luck be with you!