Global Gold Analyticals July 4, 2024 – Analysis and Forecasts – April 7, 2024
Weekly Technical and Fundamental Analysis of Gold – April 7
Last week, global gold gained momentum, rising around 4.35%. If we change the time period to weekly, we see that global gold ounces have risen for three weeks in a row.
Importantly, global gold once again successfully reached new highs last week and proudly broke the $2,300 level.
Now all eyes are on a very important report. Consumer Price Index (CPI) in America. The results of this report will have implications for gold and the dollar, as well as the continuation of the Federal Reserve’s policies regarding starting to cut interest rates or keeping them at current levels for an extended period of time.
Events in the gold market last week:
Global gold ounces opened at $2233 last Monday and then fell a few pips before starting to rise to around $2265. The rise in gold prices on the first business day of the week was due to a weaker-than-expected gold market report. Personal Consumption Expenditures (PCE) US indices last Friday.
Following the release of the PCE report, the US dollar index faced demand issues, leading to a decline in global gold prices.
But it didn’t take long for the equation to change. New York Trading Session On Monday.
If you remember, the market was waiting for the following important report: Purchasing Managers’ Index (PMI) From ISM, USA.
Business activity in the U.S. manufacturing sector expanded significantly in March, according to the latest report. The ISM manufacturing PMI increased from 47.8 in February to 50.3 in March 2024.
It is worth noting that this figure is better than the market forecast of 48.4%.
Other details in the report include the employment index increased from 45.9 to 47.4, the new orders index increased from 49.2 to 51.4, and the price payments index or inflation component of the report also increased from 52.5 to 55.8.
After this report was published, the value of the dollar began to rise, preventing further increases in gold prices.
Then on Tuesday, in the absence of significant economic data, global gold prices began to rise (1.29+%).
Wednesday was the day the markets were waiting for the ISM Services PMI report.
Wednesday’s U.S. data showed the ISM Services PMI decreased from 52.6 in February to 51.4 in March.
Most importantly, the survey’s paid price index, or inflation factor, decreased from 58.6 to 53.4, indicating that input inflation in the U.S. services sector has eased.
As the US dollar index came under downward pressure, global gold regained strength and rose again. In fact, last Wednesday was the eighth straight day that gold was green and on the rise.
On Thursday, gold continued its upward trend in the Asian trading session and hit a historic high of $2,305 before a technical correction and a broken winning streak.
however The only thing that pushed gold into the red and a minor correction during the US trading session was hawkish comments from Federal Reserve officials, which helped the dollar remain strong against its rivals.
Minneapolis Federal Reserve President Neel Kashkari, who predicted two interest rate cuts in 2024, said he was “thinking about whether the Fed could actually cut rates this year if inflation does not decline as expected.” !
Moreover, Richmond Federal Reserve President Thomas Barkin also pointed out that it is difficult to match current inflation levels with the Federal Reserve’s projections for interest rate cuts.
It finally arrived on Friday. A day when the entire market was waiting for the important US jobs report, or NFP.
that much Bureau of Labor Statistics (BLS) In March, U.S. nonfarm payrolls (NFP) reported an increase of 303,000!
It is worth noting that the market was waiting for 200,000 units. This is much higher than expected by economic analysts.
In addition, in this review, the February figure was revised downward from 275,000 to 270,000, and the January NFP figure was raised from 229,000 to 256,000.
According to this report, the unemployment rate decreased from 3.9% to 3.8%, and the labor market participation rate improved from 62.5% to 62.7%.
Finally, annual wage inflation, as measured by the change in average hourly earnings, decreased from 4.3% to 4.1%, in line with market expectations.
The US Dollar Index rose to around 104.70 after very positive and strong labor market data before starting to decline to around 104.28. Gold also soared to an important level of $2,330, ignoring the strong dollar.
A rare occurrence occurred last week regarding the generally negative relationship between gold and the 10-year Treasury yield, which was very weak.
The 10-year US Treasury yield rose above 4.4% for the first time since November 2023, but global gold ignored this important development!
The main reason for this incident is the heightened geopolitical tensions in the Middle East region.
Iran has promised revenge against Israel after an Israeli airstrike on the Iranian embassy building in Syria killed seven Iranian officers early last week. This important factor has raised concerns about deepening and prolonging conflict in the Middle East.
In addition to this problem, there is speculation in the market that China is trying to liquidate its holdings of U.S. Treasury bonds and replace them with gold.
In fact, this speculation could justify the continued rise in gold prices amid rising US Treasury yields, but the lack of information available makes it difficult to confirm or reject this theory.
China’s changes to its central bank reserves are expected to take effect from mid-May.
On March 13, the World Gold Council announced that the People’s Bank of China (PBoC) Last February, it was announced that gold reserves had increased by 22 tons.
Events in the forex and gold markets next week:
The United States is not expected to release any significant or influential news on Monday and Tuesday, when the foreign exchange trading week begins. So all eyes will be on Wednesday. On Thursday, the Bureau of Labor Statistics is scheduled to release its U.S. inflation report for March.
economic analyst Both monthly CPI and core CPI are forecast to increase by 0.3%.
If core monthly inflation in the US exceeds 0.3% for any reason, the US dollar immediately strengthens and global gold ounces adjust.
The second scenario is if US core monthly inflation declines from 0.3% to 0.2%. In this case, the dollar is expected to weaken as predictions that interest rate cuts will begin in June encourage this trend.
On Thursday, the BLS is scheduled to release an important report on the PPI, or Producer Price Index.
It is worth noting that, historically and in the past, traders have not reacted to US PPI reports, but the previous two reports generated significant reaction. As you may recall, US PPI rose 0.6% in February.
A similar significant increase in monthly producer inflation in the US could help keep consumer inflation expectations stable, which would mean a stronger US dollar.
The European Central Bank (ECB) is also scheduled to meet on Thursday. important session It determines the bank interest rate.
This session is not expected to have an impact on the value of gold prices, but dovish comments (implying interest rate cuts) could result in capital flowing from the euro into the US dollar.
If this happens, global gold ounces will have a hard time continuing their upward trend, at least on Thursday, unless the US dollar strengthens and news of war in the Middle East reaches our ears!
Lastly on Friday and during the event. Asian Trade Session, Traders will be waiting for China’s trade balance report. The world’s largest consumer of gold. Traders and investors will be following this report closely.
If, for any reason, these data indicate an improvement in China’s economic growth prospects, gold could benefit from that.
Remember, investors will also be watching geopolitical developments and comments from Federal Reserve officials.
Further escalation of tensions in the Middle East could support an upward trend in XAU/USD without considering the overall performance of the US dollar.
Weekly technical analysis of gold:
Last week, the lower and upper limits of gold price were 2228 and 2330.
If you open today’s daily chart right now and draw the RSI indicator, you can see that the peak of this indicator is rising within the overbought range and is showing 82.
This means that the bulls are still in control but should be ready for a correction from new historical highs at any time.
Moreover, if you draw a rising channel on the daily chart, you can see global gold breaking through the channel upper limit and rising.
Key support levels in global gold ounces analysis:
If gold falls, the first important support level will be around $2320. If gold falls below this level, the next major price level is $2310. If market weakness pushes gold lower, the next important levels would be $2300 and $2290.
Key Resistance Levels in Global Gold Ounces Analysis:
If gold moves higher, the first important resistance level will be $2340. If gold successfully passes this level, the next major level will be $2350. If market strength pushes gold higher, the next resistance levels would be $2,360 and $2,370.
disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor before making any investment decisions.
happy trading
May Pip be in your favor!
