- Gold price hovers near $2,400 as the US Dollar and bond yields correct.
- The Fed is expected to cut interest rates by more than 100 bps this year.
- US Initial Jobless Claims came in lower at 233K from estimates of 240K.
Gold price (XAU/USD) recovers from a two-day and climbs above $2,400 in Thursday’s New York session. The precious metal continues to hold ground due to expectations that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.
Meanwhile, the US Dollar (USD) and bond yields also recovered strongly after the release of the lower-than-expected United States (US) Initial Jobless Claims for the week ending August 2. The US Department of Labor reported that individuals claiming jobless benefits for the first time came in lower at 233K, lower than estimates of 240K and the prior release of 249K.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near three-day high of 103.40. 10-year US Treasury yields bounce back strongly to near 4%. Historically, higher yields on interest-bearing assets bode poorly for non-yielding assets, such as Gold, by increasing the opportunity cost of investment in them. But the Gold price climbs above $2,400 due to firm speculation that the Fed will start reducing interest rates in September.
Daily digest market movers: Gold price gains even them Initial Jobless Claims remain lower-than-expected
- Gold price remains steady on multiple tailwinds. Growing expectations for Fed rate-cut prospects and escalating Middle East tensions have kept the Gold price’s downside limited. The prospects for the Fed’s bulk rate cuts were bolstered by a potential economic slowdown as investors worry that the United States (US) struggles to bear the consequences of higher interest rates.
- According to the CME FedWatch tool, 30-day Federal Funds futures pricing data shows that traders see a 50-basis point (bp) cut in interest rates in September as imminent. The data also suggests that the Fed will reduce its key borrowing rates by more than 100 bps this year. Market speculation for the Fed approaching an aggressive policy stance was prompted by softening labor market conditions, signaled by slower job growth and a rising Unemployment Rate in July.
- While traders priced in aggressive rate-cut announcements by the Fed this year, US economic data has not pointed to a significant slowdown. Though the ISM Manufacturing Purchasing Managers’ Index (PMI) contracted at a faster-than-expected pace in July, activities in the service sector, which accounts for two-thirds of the economy, expanded strongly.
- Commenting on the Services PMI performance, Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The July surveys are indicative of the economy continuing to grow at the start of the third quarter at a rate comparable to GDP rising at a solid annualized 2.2% pace."
- On the geopolitical front, escalating conflicts between Iran and Israel kept Gold’s safe-haven appeal intact. Saudi Arabia said the killing of the Hamas leader in Tehran is a 'blatant violation' of Iran's sovereignty, Deccan Herald reported. Meanwhile, Israel vowed to eliminate the new Hamas chief, Yahya Sinwar.
US Dollar Price Today:
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.18% | 0.08% | 0.26% | -0.06% | -0.56% | 0.12% | 0.09% | |
| EUR | -0.18% | -0.09% | 0.10% | -0.26% | -0.74% | -0.07% | -0.12% | |
| GBP | -0.08% | 0.09% | 0.19% | -0.18% | -0.66% | -0.00% | -0.02% | |
| JPY | -0.26% | -0.10% | -0.19% | -0.36% | -0.86% | -0.21% | -0.24% | |
| CAD | 0.06% | 0.26% | 0.18% | 0.36% | -0.49% | 0.18% | 0.15% | |
| AUD | 0.56% | 0.74% | 0.66% | 0.86% | 0.49% | 0.67% | 0.64% | |
| NZD | -0.12% | 0.07% | 0.00% | 0.21% | -0.18% | -0.67% | -0.04% | |
| CHF | -0.09% | 0.12% | 0.02% | 0.24% | -0.15% | -0.64% | 0.04% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Technical Analysis: Gold price aims to stabilize above $2,400
Gold price trades in a channel formation on a daily timeframe, which is slightly rising but broadly exhibited a sideways performance for more than three months. The 50-day Exponential Moving Average (EMA) near $2,370 continues to provide support to the Gold price bulls.
The 14-day Relative Strength Index (RSI) oscillates within the 40.00-60.00 range, suggesting indecisiveness among market participants.
A fresh upside would appear if the Gold price breaks above its all-time high of $2,483.75, which will send it into unchartered territory.
On the downside, the upward-sloping trendline at $2,225, plotted from the October 6 low near $1,810.50, will be a major support in the longer term.
Economic Indicator
Initial Jobless Claims
The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. A larger-than-expected number indicates weakness in the US labor market, reflects negatively on the US economy, and is negative for the US Dollar (USD). On the other hand, a decreasing number should be taken as bullish for the USD.
Read more.Last release: Thu Aug 08, 2024 12:30
Frequency: Weekly
Actual: 233K
Consensus: 240K
Previous: 249K
Source: US Department of Labor
Every Thursday, the US Department of Labor publishes the number of previous week’s initial claims for unemployment benefits in the US. Since this reading could be highly volatile, investors may pay closer attention to the four-week average. A downtrend is seen as a sign of an improving labour market and could have a positive impact on the USD’s performance against its rivals and vice versa.
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.
Recommended content
Editors’ Picks
EUR/USD drops toward 1.1100, as USD recovers ahead of Fed Minutes
EUR/USD is on a slippering slope toward 1.1100, snapping a three-day winning streak in the European session on Wednesday. The pair is weighed down by resurgent US Dollar demand, as markets turn cautious ahead of the annual US NFP revisions and the Fed Minutes.
GBP/USD retreats toward 1.3000 on renewed US Dollar demand
GBP/USD is pulling back toward 1.3000 in European trading on Wednesday, having hit yearly highs at 1.3052 on Tuesday. The US Dollar finds fresh demand amid a tepid risk tone, as traders await the US NFP revisions and the Fed Minutes for fresh cues on the policy path.
Gold remains poised to test $2,550, with eyes on Fed Minutes
Gold price is on the front foot above $2,510 in Wednesday’s Asian trading, consolidating the previous upsurge to a new all-time high of $2,532. Gold traders take account of broad risk-aversion and refrain from placing fresh bets ahead of the Minutes of the Fed July meeting due later on Wednesday.
Bitcoin price consolidates in $57,000 to $62,000 band
Bitcoin and Ethereum prices are expected to drop after struggling to break through critical resistance levels, and momentum indicators show bearish biases. In contrast, Ripple is showing stability near its daily support level of $0.544, suggesting a possible rebound.
US Dollar extends losses, Gold shines
The dollar’s misery is making gold shine like a new penny. The precious metal advanced to a fresh record yesterday backed by the rising expectation of Fed cuts and the lower US yields.