Articles

AUD/USD slips below 0.6500, nearly two-week low amid notable USD demand

February 28, 2024 18:26   FXStreet   Market News  


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  • AUD/USD meets with heavy supply following the release of the softer Australian CPI report.
  • A strong pickup in the USD demand exerts additional pressure and contributes to the fall.
  • Traders now look to the US Q4 GDP for some impetus ahead of the US PCE on Thursday.

The AUD/USD pair comes under intense selling pressure following the previous day’s directionless price action and dives to a nearly two-week low during the first half of the European session. Spot prices slide back below the 0.6500 psychological mark in the last hour and seem vulnerable to waken further amid broad-based US Dollar (USD) strength.e

The initial market reaction to Tuesday’s disappointing US Durable Goods Orders turns out to be short-lived amid expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. Furthermore, a turnaround in the global risk sentiment – as depicted by a pullback in the equity markets – benefits the Greenback’s relative safe-haven status and drives flows away from the perceived riskier Aussie.

The Australian Dollar (AUD), on the other hand, is undermined by domestic consumer inflation figures, which held steady at a two-year low in January as against consensus estimates for an uptick. In fact, the Australian Bureau of Statistics (ABS) reported that the headline CPI rose by the 3.4% YoY rate during the reported month, matching the lowest reading since November 2021 touched in December.

Adding to this, the Core CPI, which excludes volatile items such as fuel, fresh food and holiday travel, eased from the 4.2% YoY rate seen in the previous month to 4.1% in January. The data fuelled speculations that price pressures could abate more rapidly than expected and reduce the possibility of another interest rate hike by the Reserve Bank of Australia (RBA), which, in turn, weighs heavily on the AUD.

Meanwhile, the flight to safety triggers a fresh leg down in the US Treasury bond yields and might hold back the USD bulls from placing aggressive bets. This could lend support to the AUD/USD pair ahead of the crucial US Personal Consumption Expenditure (PCE) Price Index on Thursday. In the meantime, traders on Wednesday will take cues from the prelim US Q4 GDP print and Fed speaks for some impetus.

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EUR/USD languishes near one-week low amid stronger USD, ahead of US macro data

February 28, 2024 18:26   FXStreet   Market News  


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  • EUR/USD drifts lower for the second straight day amid resurgent USD demand.
  • Hawkish Fed expectations and the cautious mood boost the safe-haven buck.
  • Reduced bets for more aggressive ECB rate cuts could limit any further losses.

The EUR/USD pair comes under intense selling pressure on Wednesday and drops to a one-week low during the first half of the European session. Spot prices, however, show some resilience below the 1.0800 mark and rebound a few pips in the last hour, though any meaningful recovery seems elusive in the wake of a goodish pickup in the US Dollar (USD) demand. Investors now seem convinced that the Federal Reserve (Fed) will wait until the June policy meeting before cutting interest rates. This, along with a turnaround in the global risk sentiment, benefits the safe-haven Greenback. 

That said, a fresh leg down in the US Treasury bond yields might hold back the USD bulls from placing aggressive bets. This, along with reduced bets for a more rapid cut in borrowing costs by the European Central Bank (ECB), could lend support to the shared currency and limit the downside for the EUR/USD pair. Investors might also prefer to move to the sidelines ahead of the crucial inflation figures from the Eurozone and the United States (US). The flash CPI estimates from Germany, France and Spain are due for release on Thursday ahead of the US Personal Consumption Expenditures (PCE) Price Index. 

This will be followed by the Eurozone inflation data on Friday, which will drive the shared currency, which will play a key role in driving the Euro and providing some impetus to the EUR/USD pair ahead of the ECB meeting on March 7. In the meantime, traders on Wednesday will take cues from the Prelim US Q4 GDP print, which, along with speeches by influential FOMC members, should contribute to producing short-term opportunities around the EUR/USD pair. 

Daily digest market movers: Bears seize intraday control amid strong pickup in the USD demand

  • The Federal Reserve’s hawkish outlook on interest rates, along with the cautious market mood, boosts the safe-haven US Dollar and drags the EUR/USD pair lower for the second successive day on Wednesday.
  • Fed Governor Michelle Bowman said on Tuesday that she was in no rush to cut interest rates and that the slower-than-expected progress on inflation has left policymakers cautious about monetary policy stance. This reaffirms bets that the US central bank will wait until June before cutting rates and tempers investors’ appetite for riskier assets ahead of the US Personal Consumption Expenditure Price Index on Thursday.
  • Meanwhile, the looming US government shutdown and Tuesday’s disappointing release of US Durable Goods Orders do little to influence the USD uptick, though retreating US Treasury bond yields might cap gains.
  • US President Joe Biden urged Congress leaders to move quickly and emphasized the necessity of finding a solution to avert a detrimental government shutdown as a legislative logjam showed no signs of abating.
  • The US Census Bureau reported that orders for long-lasting US manufactured goods registered a steep fall of 6.1% in January, the most in nearly four years and worse than the 4.5% decline anticipated.
  • Separately, the Conference Board’s Consumer Sentiment Index fell to 106.7 for February after three straight months of gains amid anxiety over potential recession, despite declining inflation expectations.
  • Furthermore, the Richmond Fed’s Manufacturing Index recorded the fourth successive month of a negative reading, though it improved to -5 in February as compared to  -15 in the previous month.
  • Traders have scaled back their bets for a rapid reduction in borrowing costs by the European Central Bank and now expect less than 100 bps of rate cuts this year, down from around 150 bps at the start of February.
  • The market focus remains on the country-level consumer inflation data from Germany, France and Spain, to be published on Thursday. These data will be followed by the Eurozone region-wide flash CPI print on Friday.

Technical analysis: Break below the 1.0785 horizontal support could pave the way for deeper losses

From a technical perspective, the recent failure ahead of the 1.0900 mark and the subsequent slide below the 200-day Simple Moving Average (SMA) could be seen as a fresh trigger for bearish traders. That said, oscillators on the daily chart are yet to confirm the negative outlook and warrant some caution before positioning for any further losses. Hence, any further downfall is more likely to find decent support near the 1.0785 horizontal zone. The said area should act as a key pivotal point, which if broken decisively could make the EUR/USD pair vulnerable to accelerate the fall back towards retesting sub-1.0700 levels, or a three-month low touched on February 14.

On the flip side, the 1.0850 region seems to act as an immediate resistance, above which the EUR/USD pair could make a fresh attempt to conquer the 1.0900 round figure. Some follow-through buying should pave the way for a further near-term appreciating move towards reclaiming the 1.1000 psychological mark for the first time since January 11.

Euro price today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   0.32% 0.37% 0.32% 0.68% 0.19% 1.06% 0.21%
EUR -0.29%   0.08% 0.01% 0.39% -0.13% 0.77% -0.10%
GBP -0.37% -0.07%   -0.06% 0.30% -0.19% 0.69% -0.19%
CAD -0.32% -0.04% 0.06%   0.36% -0.13% 0.75% -0.09%
AUD -0.70% -0.39% -0.32% -0.38%   -0.51% 0.38% -0.48%
JPY -0.19% 0.10% 0.17% 0.12% 0.52%   0.87% 0.02%
NZD -1.08% -0.77% -0.69% -0.76% -0.39% -0.89%   -0.86%
CHF -0.21% 0.11% 0.16% 0.10% 0.49% -0.02% 0.85%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

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AUD/USD: Support must hold at 0.6480 to avoid a deeper pullback – SocGen

February 28, 2024 18:21   FXStreet   Market News  


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The Australian Dollar (AUD) is under the gun after below forecast Aussie Consumer Price Index (CPI) data. Economists at Société Générale analyze AUD/USD outlook. 

Australia’s CPI steady at 3.4% in January, core eases to 4.1%  

The RBA will draw comfort from the January CPI data but will not declare victory.

Inflation stagnated at 3.4% instead of accelerating again, and core slowed to 4.1%, the lowest in two years. Progress is glacial but the central bank can be confident in the base case playing out and inflation will return to the target range of 2-3% in 2025 without the need for additional tightening. 

For AUD/USD, the chart does not look great and price action is reminiscent of early February when the successful break above the 200-DMA proved short-lived. Support must hold at 0.6480 to avoid a deeper pullback.

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XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

February 28, 2024 18:21   FXStreet   Market News  


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  • XRP price climbed to $0.58, inching closer to $0.60 target on Wednesday. 
  • The SEC has requested a change to the remedies briefing deadlines in its lawsuit against Ripple. 
  • Ripple’s deadline to file an opposition brief could be extended to April 22, 2024. 

XRP price rallied on Wednesday in response to the Securities and Exchange Commission’s (SEC) push to delay the remedies briefing deadline in its lawsuit against the payment remittance firm. 

The next key date for the SEC v. Ripple lawsuit, following the delay requested by the SEC is April 22, 2024. 

Also read: XRP price wipes out losses, Ripple plans blockchain roadmap reveal for 2024

Daily Digest Market Movers: Ripple lawsuit faces further delay

  • The SEC has revealed plans to delay the remedies briefing deadlines in its lawsuit against Ripple. 
  • Prior to the SEC’s request, Ripple had asked for an extension of the deadline for the discovery phase, in order to prepare the documents required by the regulator. 
  • The SEC’s push for delay implies that the regulator’s opening brief deadline will be extended to March 22, 2024 while Ripple’s deadline to file its opposition brief will be extended to April 22, 2024. 
  • The regulator’s deadline to file a reply to Ripple’s opposition brief will be extended to May 6, 2024. 
  • While the SEC’s bid for delay prolongs the legal battle between the payment remittance firm and the agency, it has likely catalyzed gains in XRPLedger’s native token, XRP. 
  • XRP price climbed on Wednesday, inching closer to its $0.60 target. 

Technical Analysis: XRP price could hit $0.60 target in its uptrend 

XRP price climbed to $0.58 on Wednesday. The altcoin is rallying closer to its $0.60 target. Bitcoin price sustained above the $57,000 level on Wednesday and the SEC bid to delay the remedies brief filing in the lawsuit against Ripple. These two factors are likely catalyzing XRP price gains. 

XRP price  is likely to rally towards its $0.6405 target, the 2024 high for the altcoin. In its uptrend XRP price faces resistance at the 78.6% Fibonacci retracement of the decline from the 2024 peak, at $0.6073. A successful break past this level could push XRP towards a new yearly high. 

The Moving Average Convergence/ Divergence (MACD) indicator, and the Awesome Oscillator (AO) support XRP price gains and show that the uptrend is intact. 

XRP

XRP/USDT 1-day chart 

A daily candlestick close below the 50% retracement at $0.5629 could invalidate the bullish thesis for XRP and send the altcoin to support at the 38.2% Fibonacci retracement at $0.5446. 

Crypto ETF FAQs

An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.


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Stock Market Today: Nifty and Sensex end 1.0% lower on Wednesday

February 28, 2024 18:17   FXStreet   Market News  


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  • India’s Nifty and Sensex lost 1.0% on Wednesday after opening with modest gains.
  • Nifty and Sensex were undermined by steep losses in the auto sector stocks.
  • Wednesday’s US GDP revision eyed ahead of Thursday’s US PCE inflation, India’s Q3 GDP data.

The Sensex 30 and Nifty 50, India’s key benchmark indices, ended Wednesday with sizeable losses after opening marginally higher.

Global markets turned cautious, in the face of a renewed downside in Chinese stocks and nervousness in the run-up to a fresh batch of US economic data.

Indian traders remained on edge ahead of India’s third-quarter Gross Domestic Product (GDP) data and the expiry of monthly derivatives contracts due later this week.

The National Stock Exchange (NSE) Nifty 50 and the Bombay Stock Exchange (BSE) Sensex 30 lost about 1.10% on the day to settle at 21,951.15 and 72,304.88 respectively.

Stock market news

  • The top gainers on Nifty included Infosys, TCS, Bharti Airtel and Hindustan Unilever. Meanwhile, the main laggards were Apollo Hospital, Eicher Motors, Bajaj Auto, Powergrid and Maruti.
  • Shares of Vodafone Idea tumbled roughly 14% on Wednesday after the company’s board decided to raise around Rs 45,000 crore through a combination of equity and debt for rolling out the 4G network.
  • Patanjali Foods shares tanked 5% after the Supreme Court issued a contempt notice to Patanjali Ayurved’s Baba Ramdev and Acharya Balakrishna for publishing advertisements of products in violation of the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954.
  • The NSE’s Index Maintenance Sub-Committee is scheduled to meet on Wednesday after market hours to review the constituents of various indices of the Nifty.
  • Reliance Capital is set to be delisted from the bourses following its acquisition by the Hinduja Group entity.
  • Foreign Institutional Investors (FIIs) offloaded equities worth INR1,509.16 crore on Tuesday, according to exchange data.
  • The third term of the Narendra Modi government will see transformative reforms in sectors such as digital infrastructure, space, artificial intelligence, specialized warehousing, agriculture and tourism, India’s Finance Minister Nirmala Sitharaman said on Tuesday.
  • The US stock markets closed mixed on Tuesday, as markets weighed a 6.1% slump in the US Durable Goods Orders data and a dip in the CB Consumer Confidence index.
  • Wednesday’s US GDP revision will be closely eyed before the key US PCE inflation data and India’s Gross Domestic Product (GDP) data due on Thursday.
  • Markets are currently pricing in just about a 20% chance that the US Federal Reserve (Fed) could begin easing rates in May, much lower than an over 90% chance a month ago, according to the CME FedWatch Tool. For the June meeting, the probability for a rate cut now stands at about 60%, down from 70% seen a few days ago.

Nifty 50 FAQs

The Nifty 50, or simply Nifty, is the most commonly followed stock index in India. It was launched in 1996 by the National Stock Exchange of India (NSE). It plots the weighted average share price of 50 of the largest Indian corporations, offering investors comprehensive exposure to 13 sectors of the economy. Each corporation’s weighting is based on its “free-float capitalization”, or the value of all its shares readily available for trading.

The Nifty is a composite so its value is dependent on the performance of the companies that make up the index, as revealed in their quarterly and annual results. Another factor is government policies, such as when in 2016 the government decided to demonetize 500 and 1000 Rupee banknotes. This led to a temporary cash shortage which negatively impacted the Nifty. The level of interest rates set by the Reserve Bank of India is a further factor as it determines the cost of borrowing. Climate change, pandemics and natural disasters are also drivers.

The Nifty 50 was launched on April 22, 1996 at a base level of 1,000. Its highest recorded level to date is 22,097 achieved on January 15, 2024 (this is being written in Feb 2024). The index first closed above the 10,000 level on October 17, 2017. The Nifty recorded its biggest daily decline on March 23, 2020 during the Covid pandemic, when it fell 1,125 points or 12.37%. The Nifty’s biggest gain in a single day occurred on May 18, 2009, when it rose 651 points after the results of the Indian elections.

Major corporations in the Nifty 50 include HDFC Bank, Reliance Industries, ICICI Bank, Tata Consultancy Services, Larsen and Toubro, ITC Ltd, Housing Development Finance Corporation Ltd and Kotak Mahendra Bank.

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Belgium Gross Domestic Product (QoQ) below forecasts (0.4%) in 4Q: Actual (0.3%)

February 28, 2024 18:17   FXStreet   Market News  

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Eurozone Economic Sentiment Indicator came in at 95.4 below forecasts (96.7) in February

February 28, 2024 18:12   FXStreet   Market News  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

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Eurozone Consumer Confidence meets expectations (-15.5) in February

February 28, 2024 18:12   FXStreet   Market News  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

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Gold price falls amid uncertainty over US core PCE price index data

February 28, 2024 18:09   FXStreet   Market News  


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  • Gold price falls sharply as Fed policymakers maintain a hawkish narrative.
  • The US Dollar strengthens as market expectations for early Fed rate cuts ease.
  • Investors await the US core PCE inflation data for fresh guidance.

Gold price (XAU/USD) comes under pressure in Wednesday’s European session as Federal Reserve (Fed) policymakers are not interested in lowering interest rates anytime in the first half of 2024. Higher interest rates are negative for non-yielding Gold as they increase the opportunity cost of holding the precious metal

For fresh cues about the timing for rate cuts, investors will focus on the United States core Personal Consumption Expenditure price index (PCE) data for January, which will be published on Thursday. Market expectations for rate cuts will be trimmed if the underlying inflation data turns out stickier than expectations. Such an outcome could trigger a downside move in Gold price. 

Downbeat US Durable Goods Orders data for January released on Tuesday failed to catalyze gains in Gold price. Fresh orders for Durable Goods were down by 6.1%, while investors projected a decline of 4.5%. Weak demand for durable goods indicates a poor outlook for consumer spending.

Daily Digest Market Movers: Gold price eases while US Dollar strengthens

  • Gold price trades lower below $2,030, while the US Dollar strengthens ahead of the United States core PCE price index data for January, which will be published on Thursday.
  • The underlying inflation data will provide cues about when the Federal Reserve could consider a dovish shift in its monetary policy stance.
  • Expectations are for the core PCE price index to have grown by 0.4% on a month-on-month basis in January against a 0.2% increase in December. Annually, the underlying inflation data is forecast to have decelerated to 2.8% from 2.9% in December. 
  • Sticky price pressures would allow Fed policymakers to argue in favor of keeping interest rates restrictive in the first half of 2024.
  • Most Fed policymakers want to see more evidence to confirm that inflation will return sustainably to the 2% target before cutting rates.
  • Currently, market expectations for rate cuts are considerably aligned with Fed policymakers who see no need to rush to reduce interest rates.
  • The CME FedWatch tool shows that interest rates will remain unchanged in the range of 5.25%-5.50% in the March and May policy meetings. For the June meeting, traders see a 50% chance for a rate cut by 25 basis points (bps).
  • On Tuesday, Federal Reserve Governor Michelle Bowman also supported keeping interest rates steady as early rate cuts could stall progress in inflation easing towards 2% or resurge price pressures.
  • Michelle Bowman added that strong inflation readings in January and a tight labor market suggest slowing progress in inflation declining to 2%.
  • Meanwhile, the US Dollar will be guided by the second estimate of Q4 Gross Domestic Product (GDP), which will be published at 13:30 GMT on Wednesday.
  • The Q4 annualized GDP is expected to come out unchanged at 3.3%.
  • The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, soars above 104.00 as uncertainty over US economic data has improved the appeal for safe-haven assets.

Technical Analysis: Gold price fails to sustain above $2,040

Gold price drops after failing to climb above the downward-sloping border of the Symmetrical Triangle pattern, which is plotted from the December 28 high at $2,088. The upward-sloping border of the chart pattern is placed from the December 13 low at $1,973.

The triangle could break out in either direction. However, the odds marginally favor a move in the direction of the trend before the formation of the triangle – in this case, up. A decisive break above or below the triangle boundary lines would indicate a breakout is underway. 

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 region, which indicates indecisiveness among investors.

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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Eurozone Business Climate fell from previous -0.4 to -0.42 in February

February 28, 2024 18:09   FXStreet   Market News  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

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The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

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Belgium Gross Domestic Product (QoQ) below expectations (0.4%) in 4Q: Actual (0.3%)

February 28, 2024 18:05   FXStreet   Market News  

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Eurozone Industrial Confidence registered at -9.5, below expectations (-9.2) in February

February 28, 2024 18:05   FXStreet   Market News  

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