enDaily Analysis 05/07/2024
Latest Economic and Fundamental Insights
The dollar index held steady at 105 on Friday, hovering near a three-week low, as investors braced for a crucial U.S. jobs report that is expected to show more signs of a slowdown in the U.S. labor market, supporting the Federal Reserve’s case for starting to cut interest rates soon.
Gold heads higher for second straight week; focus on U.S. jobs data
Silver is heading for its best week since May 17, with the US non-farm payrolls report due at 15:30 Mecca time, and palladium on track for a third straight weekly gain.
The US dollar was on track for a weekly decline, making dollar-denominated gold more attractive to buyers holding other currencies.
“Gold has had a productive week so far, with the precious metal benefiting from some weaker US macroeconomic data,” said Tim Waterer, chief market analyst at KCM Trade.
Economic data released on Wednesday, including weak services and ADP employment reports, pointed to a slowdown in the U.S. economy. A separate report showed an increase in initial applications for unemployment benefits in the United States last week.
Market eyes are on the US Non-Farm Payrolls report due at 15:30 Mecca time.
“If the jobs data comes in below expectations on the lower side, I expect investors to start thinking more about a potential rate cut in September by the Fed, which could send gold back to the $2,400 level,” Waterer said.
Traders currently price in a 73% chance of a Fed rate cut in September, according to the CME FedWatch Tool.
Low interest rates reduce the opportunity cost of holding non-yielding gold.
Analysts at NAB expect gold prices to average around $2,200 per ounce in 2024 before falling to $2,050 in 2025.
“Gold demand in early 2024 is supported by central bank purchases – as the main priority for these institutions appears to be to diversify assets within their reserves,” NAB said in a note.
Asian stock markets hit fresh highs on Friday as investors weighed the September U.S. interest rate cut and upbeat sentiment, while the euro hit a three-week high ahead of French elections.
Oil is heading for a fourth straight weekly gain, with Brent crude trading at $87.00 and WTI at $83.00.
The U.S. Energy Information Administration said U.S. crude inventories fell by 12.2 million barrels last week, far exceeding expectations for a 680,000-barrel draw.
U.S. gasoline inventories also fell by 2.2 million barrels, versus expectations for a 1 million-barrel draw, indicating strong seasonal demand.
Moreover, escalating geopolitical tensions in the Middle East have exacerbated concerns about oil supplies following reports that Israel killed a senior Hezbollah commander, prompting Hezbollah to respond near the border.
-Bitcoin price failed to start a recovery wave above the $61,500 resistance area. Bitcoin started declining again and may drop towards $55,000.
Smart technical reports
How they work
A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.
If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.
The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.
These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.
GOLD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 2363.95 Scenario 1: Buy gold with a break and stability above 2366.77 with a target price of 2373.20 and 2380.33
Alternative scenario: Sell gold with a break and stability below 2355.39, targeting 2348.94 and then 2342.71
Comment: Trading above the supports and averages suggests an upward trend.
CRUDE OIL
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: $83.08 per barrel
Scenario 1: Buy oil with a break and stability by closing a candle above the $83.29 levels, targeting $83.76 and then $84.33.
Alternative scenario: Sell oil by breaking $82.61 with a target price of $82.09 then $81.51
Comment: Trading above the supports and averages suggests an upward trend.
EURUSD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.08230
First scenario: Buy the Euro-Dollar by breaking 1.08291, targeting 1.08476 and then 1.08700.
Alternative scenario: Sell the EUR/USD with a break and stability by closing a candle below 1.08064, targeting 1.07904 and then 1.07691.
Comment: Trading on support and averages suggests an upward trend.
GBPUSD
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.27742
Scenario 1: Buy the pound dollar with a break and stability above the 1.27845 level, targeting the price of 1.28131 and then 1.28352.
Alternative scenario: Selling the pound dollar with a break and stability with a close below 1.27509, targeting 1.27311 and then 1.27087
Comment: Trading above the supports and averages suggests an upward trend.
NAS100
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: 20440
Scenario 1: Buy Nasdaq with a break and hold with a close above 20461, targeting 20531 then 20611
Alternative scenario: Sell Nasdaq with break and hold with close below 20360 price 20303 then 20252
Comment: Trading above the supports and averages suggests an upward trend.
Economic Calendar
(Times are in GMT+3)
-From USA Average Hourly Earnings (MoM) (June) 15:30
-From USA Non-Farm Payrolls Report (June) 15:30
-From USA Unemployment Rate (June) 15:30
-From USA Federal Reserve Monetary Policy Committee Report 15:30
Fundamental Analysis
The dollar index held steady at 105 on Friday, hovering near a three-week low, as investors braced for a crucial U.S. jobs report that is expected to show more signs of a slowdown in the U.S. labor market, supporting the Federal Reserve’s case for starting to cut interest rates soon.
Earlier this week, data pointed to a surprise contraction in services activity and disappointing private-sector employment figures in the United States, which supported dovish expectations about Federal Reserve policy.
Markets currently price in a 73% chance that the Fed will start cutting interest rates in September.
Externally, the dollar faced pressure from a stronger euro as European Central Bank policymakers signaled concerns about recent inflation trends, while sterling rose after opinion polls pointed to a landslide victory for Labour in the UK general election.
Gold prices rose on Friday and were set for a second straight weekly gain, as traders awaited U.S. employment data to gauge the path of potential interest rate cuts by the Federal Reserve.
West Texas Intermediate crude futures rose to around $84 a barrel on Friday and were set to rise for a fourth straight week as oil prices were supported by a drop in U.S. crude inventories and signs of strong seasonal demand.
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