Gold Price Forecast: XAU/USD sees exhaustion around $1,820 after a downside move, DXY skids

Gold Price Forecast: XAU/USD sees exhaustion around $1,820 after a downside move, DXY skids

👉Gold price is expected to rebound as a retest of Wednesday’s low shows a loss of downside momentum.

👉The hawkish commentary from Fed Powell has put the gold prices on tenterhooks for a prolonged period.

👉The DXY is performing lackluster on the downbeat US PMI.

Gold price (XAU/USD) is hoping for a rebound as the gold bears are indicating a loss of momentum after testing Wednesday’s low around $1,820.00. The precious metal is oscillating in a narrow range of $1,822.67-1,825.47 from the late New York session and is now showing some signs of an upside break of the rangebound move.

The commentary from Federal Reserve (Fed) chair Jerome Powell’s testimony that the central bank is ‘unintentionally committed’ to bringing price stability in the US economy has kept the gold prices on the tenterhooks. To achieve the targeted inflation rate, the Fed is needed to elevate interest rates quickly. Comparing the current inflation rate with the targeted one, the former is at least four times of the latter.

Meanwhile, the US dollar index (DXY) is expecting a downside move on displaying underperformance on the Purchase Managers Index (PMI) front. The Manufacturing PMI landed at 52.4 much lower than forecasts and the prior print of 56 and 57 respectively. Also, the Services PMI slipped sharply to 51.6 from the consensus of 53.5 and the prior print of 53.4.

Gold technical analysis

On a broader note, the gold prices are displaying topsy-turvy moves in a range of $1,821.72-1,847.95. The 20- and 50-period Exponential Moving Averages (EMAs) at $1,828.30 and $1,831.58 respectively are scaling lower, which strengthens a downside bias. Meanwhile, the Relative Strength Index (RSI) (14) is displaying signs of momentum loss on the downside. The momentum oscillator is gauging support around 40.00 levels.

GBP/USD teases bears around 1.2250 ahead of UK inflation, Fed Chair Powell’s testimony

GBP/USD teases bears around 1.2250 ahead of UK inflation, Fed Chair Powell’s testimony

👉 GBP/USD snaps two-day uptrend, flirts with intraday low at the latest.

👉 Brexit pessimism joins UK’s political chaos to portray downbeat conditions at home.

👉 BOE’s failure to impress bulls highlights UK CPI amid hopes of faster/heavier rate hikes.

👉 Powell needs to justify the biggest rate increase since 1994 and signal Fed’s aggression to please USD bulls.

GBP/USD fails to stay on the bull’s radar as it retreats to 1.2250 during the mid-Asian session on Wednesday. The cable pair’s latest weakness could be linked to the market’s risk-off mood, as well as anxiety ahead of the key UK Consumer Price Index (CPI) and Fed Chair Jerome Powell’s Testimony. Also drowning the quote is the pessimism surrounding Brexit and the UK’s political conditions, not to for fears of disappointment from the Bank of England (BOE).

Market sentiment sours amid fears of the Fed’s aggression, as well as concerning the US recession. US President Joe Biden and Treasury Secretary Janet Yellen tried to convince markets that the recession fears aren’t inevitable. Further, Richmond Federal Reserve President Thomas Barkin said that there will be no rapid return for the U.S. economy to the experience of the previous decade of stable growth, jobs and inflation, Reuters reported. While portraying the mood, S&P 500 Futures and the US 10-year Treasury yields fade the recent upside momentum.

On the other hand, fears that Fed’s Powell will push for more rate hikes, as well as downbeat expectations from the UK CPI, also weigh on the GBP/USD prices. Forecasts suggest that the UK CPI could ease to 0.6% MoM in May versus 2.5% prior even if it manages to stay firmer with 9.1% YoY figures, compared to 9.0% prior. Further, the Retail Price Index is also expected to ease while the Producer Price Index may increase during the stated month.

Elsewhere, a study by the Resolution Foundation think tank and London School of Economics mentioned that the British workers’ real pay will be cut by £470 thanks to Brexit, per the UK Mirror. “The research estimates that labor productivity will be reduced by 1.3% by the end of the decade by the changes in trading rules alone,” mentioned the news.

Furthermore, major rail strikes in the UK and Prime Minister Boris Johnson’s struggle to defend the position, especially following the allegations of breaking covid rules, exert downside pressure on the GBP/USD prices.

Looking forward, the GBP/USD pair may witness a kneejerk upside in case of the firmer UK inflation data. However, the recovery could gain a boost if Fed’s Powell fails to impress the greenback buyers.

Technical analysis

The GBP/USD pair’s successful trading above the 100-HMA and 200-HMA, as well as the RSI’s support to the recent higher lows in prices, keeps the pair buyers hopeful. That said, the latest pullback remains elusive until the quote stays above the 200-HMA support of 1.2230.

Meanwhile, recovery moves need validation from the 1.2310 hurdle, comprising the nearby triangle’s resistance line.

Gold Price Forecast: XAU/USD tumbles below $1,830 as uncertainty over Fed Powell’s testimony soars

Gold Price Forecast: XAU/USD tumbles below $1,830 as uncertainty over Fed Powell’s testimony soars

👉 Gold prices have extended their losses after slipping below the cushion of $1,830.00.

👉 Fed Powell’s testimony is expected to be extremely hawkish considering the runaway inflation rate.

👉 The EU is supposed to ban gold trading from Russia.

Gold price (XAU/USD) has extended its losses in the Asian session after violating the critical support of $1,830.00.  The precious metal was declining gradually earlier as investors were on the sidelines ahead of Federal Reserve (Fed) chair Jerome Powell’s testimony. Now, a decisive move below $1,830.00 has infused an adrenaline rush into the gold bears, which may drag the gold prices significantly lower.

Investors are hoping that Fed Powell is going to dictate an extremely hawkish stance on July monetary policy. The Fed has already elevated its interest rates to 1.50-1.75% in the last four months, however, the impact on the inflation mess is still not visible. This has supported the US dollar index (DXY), which is attempting to sustain above Tuesday’s high at 104.60.

On the global front, European Union (EU) Leaders Summit could ban imports or exports of gold or both from Russia after banning oil imports, as per Reuters. If that occurs, it may bring more uncertainty to the gold prices.

The monetary policy plans from various central banks are indicating hawkish guidance for the upcoming policies, which will keep the gold bulls on the tenterhooks.

Gold technical analysis

On an hourly scale, gold prices have displayed a downside break of the Descending Triangle, whose horizontal support is placed from $1,834.39 while the downward sloping trendline is plotted from Thursday’s high at $1,857.04. The 50-period Exponential Moving Average (EMA) at $1,835.74 is declining, which adds to the downside filters. Meanwhile, the Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00, which signals more downside ahead.

 WTI Price Analysis: 100-SMA tests bears below $116.00

WTI Price Analysis: 100-SMA tests bears below $116.00

 WTI Price Analysis: 100-SMA tests bears below $116.00 

15 June 2022, 01:49 

•WTI remains pressured around weekly low after breaking short-term key support lines.

•Downbeat RSI (14), not oversold, keeps oil bears hopeful.

•Clear downside break of $115.00 will confirm a ‘double top’ formation, which could facilitate further declines.

•Bulls remain cautious until witnessing a sustained run-up beyond 121.35.

WTI crude oil prices stay depressed at the weekly bottom, recently sidelined near $115.60-50, as sellers cheer a clear downside break of the short-term key support during Wednesday’s Asian session.

It’s worth noting that the black gold broke two support lines stretched from May but the 100-SMA challenges the bears. However, RSI (14) line joins the trend line breakdowns to keep the sellers hopeful.

In addition to the 100-SMA level near $115.30, Monday’s bottom surrounding $115.15 and the $115.00 threshold also challenge the commodity sellers.

Though, a sustained break of the $115.00 will confirm the double-top bearish chart pattern and direct the quote further south. In that case, the 200-SMA level of $110.86 and the monthly low near $110.00 could gain the market’s attention.

Following that, a downward trajectory towards May 19 swing low near $103.00 can’t be ruled out.

Alternatively, the monthly support-turned-resistance line near $115.85 appears the immediate hurdle to challenge the WTI rebound. After that, an upward sloping trend line from May 10, previous support around $116.55, will be crucial to watch for recovery moves.

Above all, the commodity buyers should wait for a clear upside break of the recent double tops before taking the driver’s seat, which in turn highlights $121.35 as the key level.

Bitcoin Crash has Melted the Fortunes of Crypto Billionaires.

Bitcoin Crash has Melted the Fortunes of Crypto Billionaires.

 Fortunes of Crypto Billionaires Are Melting With Bitcoin Crash

Their fortunes soared with cryptocurrency price records in 2021. It is also shrinking with the price crash.

They were the radiant face of the rise of cryptocurrencies in 2021. 

Some saw them as the symbol of the advent of alternative finance capable of competing with traditional finance. They were basically the new bosses of the "New Wall Street". 

The crypto craze had indeed made many millionaires and billionaires but they were in their own league: Changpeng Zhao, founder of Binance, the largest crypto exchange by volume, Sam Bankman-Fried, founder of crypto trading platform, Tyler and Cameron Winklevoss, cofounders of Gemini, Brian Armstrong and Fred Ehrsam, cofounders of Coinbase  (COIN) - Get Coinbase Global Inc Report and finally Mike Novogratz, the former Goldman Sachs banker turned crypto evangelist.

Eight months after the Crypto euphoria that had made them even richer, they are watching helplessly as the billions of dollars they had made disappear.

Changpeng Zhao had a fortune of $95.8 billion on paper on November 9, 2021, the day before Bitcoin's all-time high. As of June 13, it was only estimated at $10.2 billion, according to Bloomberg Billionaires Index. Basically, he lost $85.6 billion in eight months. 

Armstrong's fortune was estimated at $13.7 billion in November, it has decreased by $11.6 billion and is now only at $2.1 billion. 

Novogratz, who leads Galaxy Digital, saw his net wealth shrink from $6.4 billion to $2.1 billion, while Ehrsam's fell from $4.5 billion to $2.1 billion, down $2.4 billion. 

The Winklevoss brothers are the ones who are doing the best. Their fortunes have shrunk just $800 million each to $3 billion each. 

The twin brothers accused Mark Zuckerberg of having stolen their idea of   a social network to create Facebook. They used part of their millions of dollars settlement to buy bitcoin and launch Gemini, one of the most popular cryptocurrency exchanges that allow users to buy and sell crypto.

Cryptocurrency prices have been plummeting for several weeks. But this tumble accelerated on Monday: Bitcoin, the king of cryptocurrencies thus is trading to its lowest levels for 18 months around $22,000, compared to $ 69,000 last November.

 The cryptocurrency market has lost over $2.1 trillion since its November highs, according to data firm CoinGecko.

 As the risk-on impulse returns, the US Dollar Index falls to roughly 105.30 at open, with the Fed in focus.

As the risk-on impulse returns, the US Dollar Index falls to roughly 105.30 at open, with the Fed in focus.

US Dollar Index tumbles to near 105.30 at open as the risk-on impulse rebounds, Fed in focus 

15 June 2022

• The DXY has opened lower around 105.30 but is sustaining itself above the critical support of 105.00.

• Investors should brace for a rate hike of 75 bps by the Fed.

• The tight labor market is facilitating the Fed to sound extremely hawkish hassle-free.

The US dollar index (DXY) has witnessed a steep fall at open and has tumbled below 105.30 as the uncertainty over the rate hike announcement by the Federal Reserve (Fed) is fading now. The market participants have already discounted a rate hike announcement of 75 basis points as higher price pressures are demanding a serious acceleration in the interest rate that will cap the Consumer Price Index (CPI).

Price pressures and tight labor market- a deadly duo

Soaring inflation is seldom responsible for higher interest rates in the US economy at this current juncture. The US CPI has reached 8.6% on an annual basis while the core CPI that doesn’t include food and energy prices has reached 6%. But one should be aware of the fact that the upbeat Nonfarm Payrolls (NFP) have provided more liberty to the Fed. In case, the US economy remained unable to create significant job opportunities then the Fed would resort to lower rate hikes as higher rate hikes dent the labor market. Therefore, already available higher employment opportunities in the US economy are empowering the Fed to sound extremely hawkish if it wants.

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Dollar regains strength as markets turn cautious

Dollar regains strength as markets turn cautious

On Thursday, the greenback regathered its strength on risk aversion and hot inflation data, and the US Dollar Index (DXY) snapped a two-day losing streak. Investors seem to have turned cautious early Friday after foreign ministers of Russia and Ukraine failed to make progress on a ceasefire. Later in the day, the University of Michigan's preliminary Consumer Sentiment Index for March will be the only data featured in the US economic docket. Statistics Canada will release the February jobs report as well.

Following the meeting with his Ukrainian counterpart Dmytro Kuleba, Russian foreign minister Sergey Lavrov said that they had already presented Russia's conditions to end the conflict and reiterated that they want Ukraine to be neutral. In response, "we cannot stop the war if the country that started the aggression has no desire to do so," Kuleba said. Meanwhile, the UK's defence minister said on Friday that Russia was likely to re-posture its forces for renewed offensive activity in the coming days.

The S&P 500 Index lost 0.43% on Thursday and the DXY gained more than 0.5%. In the early European session, US stock index futures are trading flat.

The European Central Bank (ECB) announced on Thursday that it left the key rates unchanged as expected. On a surprising note, the bank said it will end the Asset Purchase Programme (APP) in the third quarter rather than at the end of the year as originally planned. The initial reaction to this decision provided a boost to the shared currency but ECB President Christine Lagarde's cautious comments on the economic outlook and inflation caused the euro to lose interest.

After advancing to a weekly high above 1.1100 on Thursday, EUR/USD lost its traction and closed deep in negative territory. The pair is staying relatively calm near 1.1000 early Friday. The data from Germany showed that the annual Harmonized Index of Consumer Prices was 5.5% in February, matching the flash estimate. 

GBP/USD touched its lowest level since November at 1.3071 on Friday before staging a recovery toward 1.3100. The UK's Office for National Statistics announced on Friday that the UK economy expanded by 0.8% on a monthly basis in January, compared to the market expectation of 0.2%.

Despite the risk-averse market environment, gold failed to gather bullish momentum on Thursday and came under renewed bearish pressure on Friday. Rising US Treasury bond yields after the hot US inflation data seem to be weighing on XAU/USD, which was last losing 0.7% on a daily basis at $1,982, ahead of the weekend.

USD/CAD registered losses in the previous two days and stays flat below 1.2800 early Friday. The Unemployment Rate in Canada is expected to decline to 6.2% in February from 6.5% in January.

Bitcoin lost 6% on Thursday and stays on the back foot ahead early Friday. BTC/USD was last seen losing nearly 1% on a daily basis at $39,100. Ethereum extends its slide toward $2,500 after losing more than 4% on Thursday.