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MTrading Team • 2023-05-12

Gold sellers are back as cautious markets underpin US Dollar rebound

Gold sellers are back as cautious markets underpin US Dollar rebound

Market sentiment remains dicey after a show of risk-off mood, which in turn allows the US Dollar buyers to take a breather. However, the Gold price remains depressed and falls for the third consecutive day amid fears surrounding US default, hawkish Fed and banking woes.

The US policymakers’ delaying of Friday’s debt ceiling negotiations joins more declines in US bank deposits to weigh on the sentiment even if the softer US data put a floor under the risk barometers. Adding to that are the latest jitters between the US and China, as well as talks that the central bankers, including the Fed, can keep the rates higher for longer.

With this, the NZDUSD and Oil prices are on the bear’s radar while USDCAD and AUDUSD struggle for clear directions amid hopes of an Aussie-China trade deal and improvement in the dragon nation’s inflation numbers.

Elsewhere, ETHUSD and BTCUSD drop to the lowest levels since March even as US SEC fails to gain support for harsh crypto rules.

Following are the latest moves of the key assets:

  • Brent oil drops for the third consecutive day, down over 1.0% to $74.70 at the latest.
  • Gold price remains bearish as sellers poke $2,009 by the press time.
  • USD Index remains sidelined at weekly high of near 102.00 as we write.
  • Wall Street closed mixed and so did the Asia-Pacific shares. On the same line, equities in Europe and the UK trade mixed during the initial hour of trading.
  • BTCUSD and ETHUSD drop for the seventh consecutive day to $26,300 and $1,760 as we write.
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Mixed markets fail to put a floor under riskier assets

Although the risk aversion fades during early Friday, the cautious mood ahead of the key data and events joins looming concerns about the US default and the banking sector's failure to reject the optimists. The same weighs on the riskier assets likely Antipodeans, commodities and cryptocurrencies, not to forget the equities, even as the US Dollar bulls take a breather after posting a stellar run-up the previous day.

RBNZ’s downbeat inflation expectations acted as an extra burden on the NZDUSD offering it the biggest daily loss among the Gf10 currency pairs. On the same line, fears of economic slowdown and higher US releases of Oil reserves weigh on prices of Brent and WTI crude oil. Further, Gold fails to benefit from the US dollar’s pause in rising further, as well as a likely increase in China inflation. It should be noted that softer UK GDP contrasted with mixed British data of activities to allow the GBPUSD bears to take a breather.

Cryptocurrencies bear the burden of news that Elon Musk is likely to step down from Twitter CEO’s place, as well as build up in positions amid recession woes.

  • Strong buy: Gold
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD

Risk catalysts are the key

Although the US Consumer sentiment and more inflation signals are likely to decorate Friday’s economic calendar, headlines about the US default and banking will be more important to watch for clear directions as the same has recently propelled risk-off mood. That said, central bankers are also on the calendar and can move the markets if they chose to unveil lingering economic woes. Above all, the market’s pessimism is back on the table and can give new life to the US Dollar, which in turn can weigh on the prices of the previous beneficiaries from the greenback’s fall, like Gold, Crude Oil and AUDUSD.

May the trading luck be with you!