Gold pares weekly gains amid dicey markets

Market sentiment is slightly positive due to reduced worries about a major US economic downturn and quick actions by central banks. The calm in the market is also helped by a light news calendar and no major negative updates. However, traders are cautious ahead of important US consumer data, which is slowing market activity.

The US Dollar and Treasury bond yields are struggling to maintain recent gains despite positive Retail Sales and Jobless Claims reports. US stock futures and Asian markets are rising.

The EURUSD is recovering from a dip and moving up from a yearly high, while GBPUSD is set for its biggest weekly gain since early July despite mixed UK data. USDJPY and USDCHF are fluctuating at their highest levels in two weeks due to their role as risk indicators. Similarly, AUDUSD and NZDUSD are moving higher, but USDCAD is ending a two-day winning streak and could face a weekly loss.

Crude Oil is seeing its first daily gain in three days due to mixed geopolitical signals and a weaker US Dollar. Gold is recovering from a previous weekly loss but lacks strong momentum as buyers seem uncertain despite the Dollar’s weakness.

BTCUSD has gained for the first time in three days but is still on track for a weekly loss, while ETHUSD has ended a three-day losing streak and aims for its first weekly gain in four weeks. An increase in Ethereum supplies and mixed on-chain data are currently challenging crypto traders.

Following are the latest moves of the key assets:

• WTI Crude oil prints the first daily gain in three around $78.00 by the press time.
• Gold struggles to defend the previous day’s recovery near $2,455 at the latest.
• USD Index pares the biggest daily jump in nine weeks by posting mild losses near 102.90 as we write.
• Wall Street closed in the green and allowed the Asia-Pacific shares to grind higher. On the same line, equities in Britain and Europe post minor gains during the initial trading hour.
• BTCUSD and ETHUSD rise more than 1.0% each to $58,300 and $2,610 as we write.

US Dollar braces for four-week downtrend…

On Thursday, positive US Retail Sales and Jobless Claims helped the US Dollar Index (DXY) recover some of its weekly losses. However, weaker regional manufacturing data and national Industrial Production figures put pressure on the Dollar.

The US data from the previous day did little to change expectations for a Federal Reserve rate cut in September but eased concerns about US economic problems. Strong consumer growth reports from Walmart also boosted market sentiment.

St. Louis Fed President Alberto Musalem and Atlanta Fed President Raphael Bostic have both supported a rate cut by the Fed in September.

Despite concerns about MonkeyPox, Venezuelan elections, and Middle East tensions, optimism remained high, supporting equities and bond yields while limiting the Dollar's rebound.

The US Dollar's struggle to hold onto gains and a lack of rate cut hints from the Eurozone helped the EURUSD rise. Positive UK economic data led to a rebound in GBPUSD, which is now set for its largest weekly gain in six weeks.

USDJPY and USDCHF are gaining as risk indicators, though the Yen faces mixed signals from Japan's economic data. The Yen’s recent gains are challenged by softer data despite strong GDP figures.

AUDUSD is benefiting from positive sentiment and hawkish comments from the Reserve Bank of Australia. Similarly, NZDUSD is recovering from losses due to the Reserve Bank of New Zealand's latest statements, which downplay further rate cuts.

USDCAD is losing ground as Crude Oil prices strengthen and the US Dollar retreats. Crude Oil itself is recovering due to Middle East concerns and anticipated energy demand growth.

Gold prices are rising, hitting new highs, supported by mixed central bank signals, growing consumer demand, a weaker US Dollar, and potential stimulus from China. Lower US Treasury bond yields and optimism from India are also contributing to Gold's strength.

• Strong Bullish: USDCAD, USDJPY, US Dollar, Silver
• Strong Bearish: AUDUSD, NZDUSD, GBPUSD, GBPJPY
• Bullish: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Bearish: DAX, FTSE 100, EURUSD, Crude Oil

Focus on US Housing data, consumer sentiment index and inflation expectations…

After mixed signals on US inflation and Retail Sales, traders are waiting for more data to confirm if the Federal Reserve will cut rates more than once in the second half of 2024. Key upcoming reports include the preliminary University of Michigan Consumer Sentiment Index, Inflation Expectations for August, and US Housing Starts and Building Permits for July. If these reports show easing inflation and decreased optimism, the US Dollar might end the week lower. Significant gains for the Dollar seem unlikely unless the data is extremely positive.

Given the likely weakness of the US Dollar, those trading Gold, GBPUSD, and EURUSD should look for new opportunities. On the other hand, USDCHF and USDJPY are less likely to reverse their trends despite the weaker Dollar.

May the trading luck be with you!