XAUUSD: The market is gloomy at the beginning of the week!

19 июн. 2023 г.

Technical analysis:

During a period of low volatility in the market, the Exponential Moving Averages (EMAs) tend to closely follow the price line, resulting in a sideways pattern. The RSI (Relative Strength Index) is currently moving at an average level. The significance of resistance and support levels is minimal in this scenario. This compressed price zone suggests a high likelihood of a breakout and the formation of a powerful wave.

Market view:

Last week, the Federal Reserve (Fed) indicated that there may be a need for borrowing costs to rise by up to 50 basis points (bps) by the end of the year. This has helped the US Dollar (USD) gain some positive momentum for the second day in a row. The USD Index (DXY), which tracks the Greenback against a variety of currencies, seems to be improving after hitting a one-month low. This is creating challenges for the price of Gold, which is denominated in US Dollars.

Additionally, the more hawkish stance taken by major central banks is also limiting the upside potential for Gold, as it does not generate any yield. It is worth noting that the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) surprised the market with a 25 bps rate hike earlier this month. Furthermore, the European Central Bank (ECB) raised rates by 25 bps last week, bringing them to the highest level in 22 years. The ECB also indicated that further tightening measures may be implemented to combat inflation.

19 июн. 2023 г.

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Secretary of State Antony Blinken says the US-China relationship had taken a “positive step” forward during his two-day trip to Beijing, putting ties between the world’s largest economies on more stable footing.

20 июн. 2023 г.

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Raising rates again in July seems very appropriate.

The ECB forecasts that inflation may decline rapidly within two years towards its target of 2%.

The ECB needs to be data dependent on inflation expectations.

The ECB is looking at a variety of measures to analyze price shocks.

The European Central Bank will discuss the appropriate decision during next September, whether to raise interest rates or not.

The ECB is very data dependent, and September is not too far away.

Earlier, a member of the European Central Bank's Monetary Policy Committee, W
Slovak National Bank Peter Casimir has maintained its support for another increase in interest rates at the next July meeting, indicating that last week's hike is not the end of the road.

20 июн. 2023 г.

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Treasury yields rise as investors await Fed speaker comments

U.S. Treasury yields were higher Tuesday as trading resumed after Monday’s Juneteenth holiday and investors looked to remarks from Federal Reserve officials for hints about upcoming monetary policy moves.

At 5:31 a.m. ET

- The 10-year Treasury was trading more than 2 basis points higher at 3.794%.

- The 2-year Treasury yield was last up marginally at 4.727%.

Yield and prices have an inverted relationship and one basis point equals 0.01%.