Gold retreats from all-time high, challenges seven-day uptrend

Markets remain cautiously optimistic early Thursday as the latest US statistics suggest easing inflation and signals early rate cuts from the Federal Reserve (Fed) even as the FOMC policymakers hesitate to accept the fact. The same joins the hopes of better diplomatic ties between the US and China and an absence of major risk-negative news to keep the traders optimistic. However, the anxiety ahead of Friday’s key US jobs report, as well as today’s multiple Fed talks, join the absence of traders from China and Hong Kong to limit the momentum.

Even so, the US Dollar Index (DXY) remains pressured for the third consecutive day while bracing for the first weekly loss in four, which in turn allows EURUSD and GBPUSD to extend the previous day’s gains. However, prices of Gold witnessed a pullback from the record high whereas the Oil buyers also stepped back from the multi-day peak marked the previous day.

USDJPY lacks clear directions while AUDUSD, USDCAD, and NZDUSD stay firmer for the third consecutive day while refreshing the weekly top.

Elsewhere, BTCUSD and ETHUSD appear defensive after bouncing off the weekly low on Wednesday as crypto traders remain cautious ahead of Bitcoin halving, especially when the US SEC calls for comments on spot Ethereum ETF applications.

Following are the latest moves of the key assets:

• Brent oil snaps a five-day uptrend to retreat from the highest level since late October, mildly offered near $89.80 as we write.
• Gold price prints half a percent intraday loss after refreshing the all-time high to $2,304, close to $2,291 at the latest.
• The USD Index drops for the third consecutive day to refresh the weekly low near 104.10 by the press time.
• Wall Street closed mixed while the Asia-Pacific stocks remained lackluster. Further, shares in Europe and the UK print minor gains during the initial trading hour.
• BTCUSD and ETHUSD both extend the previous day’s rebound from weekly lows by rising near 0.5% each to around $66,300 and $3,330 at the latest.

Gold buyers take a breather but are not out of the game…

The downbeat prints of the US ISM Services PMI and Prices Paid data suggested a softening of inflation conditions challenged the hawkish Fed bias and drowned the US Dollar, as well as the Treasury bond yields, the previous day. Also, Fed Chair Jerome Powell defended his calls for a delayed rate cut but said nothing new and hence raised fears about the US central bank’s proximity to the lower rates should the incoming data suggest more easing in price pressure. It’s worth noting that the strong points of the US ADP Employment Change also failed to impress the US Dollar bulls ahead of Friday’s US Nonfarm Payrolls (NFP).

While the US Dollar and yields were down and bolstered the Gold price, hopes of improving relations between the US and China offered additional strength to the commodity prices. That said, US Treasury Secretary Janet Yellen’s comments suggesting the need for harmony in trade relations between Washington and Beijing tamed the trade war fears.

Given the US Dollar’s slump, the EURUSD managed to ignore softer prints of the Eurozone inflation numbers and dovish comments from the European Central Bank (ECB) officials. On the same line, the GBPUSD also extended the early-week rebound despite mixed economic signals from the UK. Even so, the USDJPY managed to end Wednesday on the positive side as odds of witnessing no rate change from the Bank of Japan (BoJ) increase of late.

Furthermore, optimism surrounding China and expectations of witnessing lower rates from the US Federal Reserve (Fed), not to forget upbeat prices of commodities, helped the AUDUSD, NZDUSD, and the USDCAD to cheer the greenback’s weakness.

It should be noted that the Gold price rose to the highest level on record, before today’s retreat, while crude oil also refreshed the monthly peak, amid the broad US Dollar weakness. That said, a pause in the US Oil buying to refill the Strategic Petroleum Reserve (SPR) and a heavy build in the weekly Crude oil inventories challenged the energy buyers so far on Thursday.

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

Fewer catalysts to watch…

Holidays in China and Hong Kong, as well as a light calendar in Europe and the UK, could restrict the market’s momentum on Thursday. The same could allow the US Dollar to lick its wounds and trigger the much-awaited pullback in the prices of Gold and crude oil. However, US Jobless Claims and scheduled speeches from around 8 Fed members will entertain the traders. It should be noted that a sharp fall in the US Dollar and yields, despite upbeat US ADP Employment Change and the Fed comments, is likely to give rise to the Greenback’s rebound in case of upbeat US outcomes.

May the trading luck be with you!