- In the face of rising Treasury yields, the price of gold is projected to drop for a second consecutive week. On the back of aggressive Fed rate rise wagers and risk aversion, the US dollar returns to the fray. The price of XAU/USD continues to move in a downward direction, with $1,607 as the target.
- As we enter a new week, the price of gold is testing bullish commitments near the 2022 lows and moving toward the $1,600 mark. Prior to its decision to raise interest rates on November 2, the Fed entered the blackout period. The unexpected decline in US Jobless Claims statistics and recent remarks by Fed policymakers thus had a big impact on the optimistic Fed rate hike predictions. Following that, the US Treasury yields skyrocketed, pushing the currency up alongside it and trashing the gold.
- The XAU/USD is still negatively skewed on the daily chart, although it is still quite close to the YTD lows of $1614.92. While the Relative Strength Index (RSI), at 39.86, is going upward but still in bearish territory, the daily Exponential Moving Averages (EMAs), trading well above the spot price, maintain their bearish slope. Thus, sellers continue to be in control even though they are enjoying a break as the yellow metal gets ready to extend its losses for two consecutive weeks. The 20-day EMA will be tested if XAU/USD breaks $1650; otherwise, it will continue to be vulnerable to re-testing the YTD lows.
EURUSD: As Federal Reserve policymakers adjusted for upcoming rate hikes, the Euro recovered 0.9800.
- The Federal Reserve is building the groundwork for future interest rate increases, which have weighed on the US Dollar, to be smaller.
- Falling US bond yields made the USD weaker and the EUR stronger.
- The EURUSD is negatively skewed, but it could move higher if it breaks above 0.9900.
USDJPY: USD/JPY declines after reaching a brand-new 32-year top. Around mid-151.00s, yet nicely bid.
- To reach a new 32-year high, USD/JPY builds on the breakout advance past 150.00.
- The JPY is affected by the Fed-BoJ policy divergence and the expanding US-Japan rate disparity.
- Hawkish predictions for the Fed and high US bond yields bolster the USD.
GBP/USD: Support for the GBP/USD’s reversal from 1.1300 is found at 1.1200.
Over the previous several sessions, GBP/USD has been flirting with small trend support (1.1260, now resistance), and weakness below that trend is now producing some major falls in the short-term chart.
“Holding over 1.11 on the close will be positive, but the major risk for the pound appears to be shifting towards a retest of last week’s low at 1.0925 following a few fails in the upper 1.14s.
- The pound remains steady above1.1220.
- Weak UK data and political uncertainty are weighing on the GBP.
- GBP/USD, approaching the tip of a triangle pattern.
USD/CHF: USD/CHF Price Analysis Amid a weak US Dollar, the currency seesaws in a 200-pip range and hovers near parity.
- The USD/CHF is expected to lose 0.45% of its value for the week.
- The USD/CHF rising wedge breach would be confirmed if 1.0027 could not be reclaimed. This break would aim for the 200-day EMA at 0.9567.
S&P500: After a wild session after the release of the US Consumer Price Index (CPI) data, the S&P 500 finished a significant bullish “reversal day.” Credit Suisse analysts anticipate a more prolonged period of recovery for the index.
- Holding above the 3585 mark, a short-term bounce can’t be ruled out.
- It would be interesting to see if the index can form a base and reclaim the recent high near 3810/3840. If this break materializes, an extended up-move could take shape towards 4000 and a September high of 4120.
GOLD: Forecast for the price of gold: US bond rates decline, XAU/USD increases on rumors of a Fed turn.
Friday’s absence of US economic data to be reported left market participants leaning to further Fed commentary. On Thursday, a slew of Fed speakers, namely, the Philadelphia Fed President Patrick Harker and Fed board member Lisa Cook commented that the Fed would need to keep increasing rates.
- The market speculates on a Fed shift as the price of gold increases by roughly 1%, as a result of a WSJ piece.
- US T-bond yields decreased, which supported the gold price as it recovered from the month’s lows.
- Gold Price Prediction: Although a break over $1650 might drive gold to $1665, the downward trend is still present.
SILVER: Silver prices continued their upward trend from Thursday’s lows of $18.30 on Friday, pushing over $19.00 and so far-reaching one-week highs at $19.30. The precious metal gains more than 3% on the day, making up half of the ground lost during the sell-off the previous week.
- Silver prices extend recovery to reach levels beyond $19.00.
- The US dollar dives on Fed easing speculation.
- XAG/USD is now at a key resistance area of $19.30.
OIL: WTI turns positive, hovering around $85.00 a barrel as the US Dollar tumbles.
- Western Texas Intermediate (WTI) s set to finish the week with losses of 0.55%.
- China’s demand and a soft US Dollar underpinned oil prices.
- WTI buyers unable to crack the 50-day EMA keeps the commodity downward biased.
Watch Out This Week
- For starters, on October 24th, S&P Global PMI will be one important news to look at for 3 of the major currencies USD, Euro, and GBP. A higher-than-expected figure should be seen as negative (bearish) for the currencies, while a lower-than-expected figure should be seen as positive (bullish) for the currencies.
- Oct the 26, the USD Trade Balance report will come out, giving vital information about the overall import and export balance of the country. A higher-than-expected figure should be seen as positive (bullish) for the EURO, while a lower-than-expected figure should be seen as negative (bearish) for the EURO.
- On October 27th, the ECB interest decision data will come out. The news is expected to eventually result in aggressive market movements among all the pairs intertwined with the Euro. A result that exceeds expectations should be seen positively (bullish) for the Euro, while a figure that falls short of expectations should be viewed negatively (bearish) for the Euro.