Gold renews monthly high near $2,400 despite US Dollar’s corrective bounce

Wednesday’s downbeat US inflation and consumer-centric data renewed calls for the US Federal Reserve’s (Fed) rate cut in 2024, especially after Fed Chair Powell’s hesitance to back the rate hikes. The same drowned the US Dollar the previous day and activated the risk-on momentum. The sentiment, however, remains dicey early Thursday ahead of the second-tier US data and mixed geopolitical headlines, allowing the Greenback to lick its wounds at the lowest level in a month, after falling the most in 2024 the previous day.

The US Dollar’s weakness allowed EURUSD to rise to a two-month high, before retreating from 1.0894, whereas GBPUSD also refreshed the monthly high despite an absence of major catalysts.

Further, USDJPY snapped a three-day uptrend and dropped the most in a fortnight, pressured around the lowest level in more than a week by the press time, while USDCAD slid to a five-week low.

AUDUSD rose to a four-month high but retreated afterward amid a mixed Aussie employment report whereas NZDUSD jumped the most in six months before easing from the highest levels last seen in March.

Crude Oil picks up bids to defend the stellar recovery from an 11-week low, backed by a softer US Dollar and a draw in the weekly US inventories, while Gold price prints a three-day winning streak to refresh the monthly high.

Elsewhere, BTCUSD and ETHUSD portrayed the biggest daily gains in more than a month but eased afterward amid jittery concerns about the crypto market regulations and the mixed headlines about the Ethereum spot ETF approvals.

Following are the latest moves of the key assets:

• WTI Crude oil defends the previous day’s recovery by posting mild gains around $79.00 by the press time.
• Gold prints a three-day uptrend while refreshing its monthly high near $2,398, lacking upside momentum of late.
• The USD Index licks its wounds at the lowest levels in five weeks, snapping a three-day losing streak near 104.30 as we write.
• Wall Street closed with notable gains and allowed the Asia-Pacific shares to grind higher. However, British and European shares appear dicey during the initial trading hour.
• BTCUSD and ETHUSD print mild losses to pare the biggest daily jump in more than a month near $65,900 and $3,010 at the latest.

Fed rate cut bias weighs on US Dollar…

On Thursday, markets witnessed an active day against the US Dollar after the US Consumer Price Index (CPI), Retail Sales, and the Empire State Manufacturing Index posted downbeat figures. The same bolstered calls for the Fed’s two rate cuts in 2024 and allowed the riskier assets to rally.

Following the US data, Chief Economist of global rating agency Moody’s, Mark Zandi, tweeted the frustration surrounding the stubbornly strong growth in housing costs while also terming the US CPI as ‘Good’. On the same line was Federal Reserve Bank of Chicago President Austan Goolsbee who said, “If the decrease in housing inflation seen in April CPI data continues, that's great.”

On the other hand, President and CEO of the Federal Reserve Bank of Minneapolis Neel Kashkari tried to defend his hawkish bias while stating that the Fed is focused on underlying demand in the economy to get inflation down.

Apart from the pre-data anxiety and consolidation of the previous day’s heavy fall, geopolitical woes also contribute to the US Dollar’s corrective bounce. Among the key headlines, the news suggesting strong ties between China and Russia gained major attention after China President Xi Jinping was quoted saying, “China will always be a good friend and partner of mutual trust with Russia.”

Although the US data-backed greenback weakness propels the EURUSD pair, the upside momentum remains chained after Bank of France Governor and European Central Bank (ECB) Governing Council Francois Villeroy de Galhau said they (ECB) will very probably begin cutting at the June meeting.

Further, GBPUSD rose to the monthly high on the downbeat US Dollar while ignoring the increasing odds of the Bank of England’s (BoE) rate cuts in June and mixed UK data.

USDJPY marked the biggest daily loss in two weeks in the aftermath of the US inflation and is currently falling toward refreshing a seven-day low amid upbeat Japan Industrial Production data. It should be noted that the first readings of Japan’s Q1 2024 GDP signals a contraction in the economic activity but Japan’s economy minister, Yoshitaka Shindo, said that the economy is expected to continue a moderate recovery.

On the same line, AUDUSD also jumped the most since December 2023 amid broadly downbeat US Dollar and upbeat sentiment, but Thursday’s mixed Aussie employment report triggered the pair’s corrective pullback as the Unemployment Rate jumped to a three-month high of 4.1% for April versus 3.9% expected and prior. Further, NZDUSD traced its Australian counterpart and rallied against the Greenback the previous day but pared the biggest daily gains in six months amid the market’s consolidation early Thursday. It should be noted that the fears about China’s economic transition and the Sino-American tension, as well as the geopolitical woes, also challenge the Antipodeans like the Dollars of Australia, New Zealand, and Canada of late. That said, the USDCAD dropped to a five-week low as the softer US Dollar joined a notable recovery in the prices of Canada’s main export item, namely crude oil.

On Thursday, the WTI crude oil dropped to the lowest level since late February but recovered swiftly after the US Dollar’s fall and was backed by a higher-than-expected draw in the weekly US oil inventories to post the daily gains.

Gold remains on the front foot at the monthly, up for the third consecutive day, as dovish Fed bets join hopes of more stimulus from China and technical breakout. That said, the precious metal confirmed a one-month-old falling wedge bullish chart formation the previous day.

• Strong buy: USDCAD, USDJPY, US Dollar
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, EURUSD

Mid-tier US data, geopolitics eyed to pare weekly losses of the Greenback…

Having witnessed a volatile day, mostly in favor of the riskier assets, the traders will likely experience a consolidation in previous moves ahead of today’s second-tier data from the US. Among them, the weekly jobless claims and monthly prints of the US housing and industrial production numbers will gain major attention. Should the scheduled US statistics print strong outcomes, the US Dollar will have a reason to pare the weekly losses.

Apart from the US data, headlines surrounding Russia, China, and the Middle East could also entertain the momentum traders and can help propel the prices of US Dollar, as well as crude oil.

May the trading luck be with you!