Daily Market Analysis

 

 

Latest Economic and Fundamental Insights

 

The dollar index held above 104.5 on Tuesday, hovering near a two-week high as investors looked ahead to the Federal Reserve’s latest policy decision.

– Gold prices may find support from US interest rate cuts, Western investment
– Gold prices are expected to find support from long-awaited US interest rate cuts and renewed appetite from Western investors for the rest of the year, after central bank buying and over-the-counter purchases pushed demand to record levels in the second quarter.

Demand for the precious metal rose 4% year-on-year to 1,258 metric tons, the best second-quarter performance since 2000, according to the World Gold Council. Prices hit a record $2,427 an ounce during the period, averaging $2,338 an ounce — 18% higher than a year earlier.

“With plenty of underlying support, we believe prices could hold or build slowly in the second half,” the industry group said in its latest report on Tuesday.

Low interest rates typically boost the appeal of non-yielding gold and weigh on the US dollar, making gold cheaper for investors holding other currencies.

Central banks increased their holdings to 184 tonnes — a slowdown from the previous quarter but up 6% on the year — while over-the-counter transactions rose 53% to 329 tonnes, the WGC report showed. Meanwhile, overall holdings of gold-backed exchange-traded funds fell by about 7 tonnes to 3,105 tonnes, with regional declines in Europe and North America.

“With the long-awaited rate cut by the US Federal Reserve, inflows into gold ETFs have increased thanks to renewed interest from Western investors. A sustained investment recovery from this group could change the demand dynamics in the second half,” said Louise Street, chief market analyst at the World Gold Council.

-Markets see little chance of a U.S. rate cut this week, but they have fully priced in a 25 basis point federal funds rate cut for September and therefore expect policymakers to sound dovish. (FEDWATCH)

-Oil falls on China demand concerns, Middle East worries ease, Brent trades at $78.00, WTI at $74.00
-A batch of disappointing economic news from China has rocked markets recently. A Reuters poll showed on Monday that China’s manufacturing activity likely contracted for a third straight month in July.

Also on Monday, Citibank cut its China growth forecast to 4.8% from 5% after the country’s second-quarter growth came in below analysts’ estimates, noting that economic activity slowed further in July.

“We believe the market has a stronger downside bias in the near term, due to continued weak domestic demand from China, as well as a potential production recovery by some OPEC+ members in the fourth quarter,” said Emrill Jamil, senior analyst at LSEG Oil Research, referring to the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia.

Oil prices fell 2 percent in the previous trading session after Israel indicated that its response to a Hezbollah rocket attack on the occupied Golan Heights on Saturday would be calibrated to avoid dragging the Middle East into all-out war.

This was reinforced by a US diplomatic campaign, reported by Reuters on Monday, to limit Israel’s response and prevent it from striking the Lebanese capital Beirut or any major civilian infrastructure in retaliation.

-Bitcoin price started a downside correction from the $70,000 resistance level. Bitcoin is now correcting gains and may extend losses if it trades below $66,000.

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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.

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GOLD

 

General trend: Upward

nterval: Half an hour (30 minutes)

Current price: 2388.95

Scenario 1: Buy gold with a break and stability above 2393.39, targeting 2399.82 and 2406.95

Alternative scenario: Sell gold with a break and stability below 2382.01 with a target price of 2375.56 and then 2369.33

Comment: Trading above the supports and averages suggests an upward trend.

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CRUDE OIL

 

Trend: Down

Interval: Half an hour (30 minutes)

Current price: $74.93 per barrel

Scenario 1: Sell oil with a break and stability by closing a candle below the $74.74 levels, targeting $74.22 and then $73.63.

Alternative scenario: Buy oil by breaking the $75.42 level, targeting $75.89 and then $76.45.

Comment: Trading below the resistances and averages suggests a decline.

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EURUSD

 

General trend: Down

Interval: Half an hour (30 minutes)

Current price: 1.08211

First scenario: Sell the EUR/USD by breaking 1.08104, targeting 1.07944 and then 1.07731.

Alternative scenario: Buy the EUR/USD with a break and hold with a candle closing above 1.08332, targeting 1.08516 and then 1.08741.

Comment: Trading below the resistances and averages suggests a decline.

 

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GBPUSD

 

Trend: Down

Interval: Half an hour (30 minutes)

Current price: 1.28493

Scenario 1: Selling the pound dollar with a break and stability below the 1.28377 level, targeting the price of 1.28179 and then 1.27955

Alternative scenario: Buy the pound dollar with a break and hold with a close above 1.28713, targeting 1.28999 and then 1.29220.

Comment: Trading below the resistances and averages suggests a decline.

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NAS100

 

Trend: Down

Interval: Half an hour (30 minutes)

Current price: 19195

Scenario 1: Selling the Nasdaq with a break and stability with a close below 19141, targeting a price of 19084 and then 19033.

Alternative scenario: Buy Nasdaq breakout and hold with close above 19243 price 19312 then 19392

Comment: Trading below the resistances and averages suggests a decline.

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Economic Calendar

 

(Times are in GMT+3)

-From Europe GDP (YoY) (Q2) 12:00
-From Germany German CPI (MoM) (July) 15:00
-From USA CB Consumer Confidence Index (July) 17:00
-From USA Job Openings Index (JOLTs) (June) 17:00

 

Fundamental Analysis

 

 

The dollar index held above 104.5 on Tuesday, hovering near a two-week high as investors looked ahead to the Federal Reserve’s latest policy decision.

The central bank is widely expected to keep interest rates steady on Wednesday and pave the way for a rate cut in September.

Investors are also awaiting monetary policy decisions from the Bank of Japan and the Bank of England this week.

Last week, data showed that the headline PCE price index came in in line with expectations, but the core rate came in slightly higher than expected.

Earlier data also showed the US economy expanded at a faster-than-expected 2.8% pace in the second quarter, although bets on interest rate cuts remained.

On Tuesday, traders will be looking ahead to June job openings and July consumer confidence data.

The highly anticipated monthly jobs report is due out on Friday.

Gold fell toward $2,380 an ounce on Tuesday, extending losses from the previous session, as investors looked ahead to major central bank policy meetings this week.

Oil prices fell to their lowest in seven weeks on Tuesday as expectations of weak demand weighed on commodities, while bond, currency and stock markets traded cautiously ahead of central bank meetings in the United States and Japan and a series of major corporate earnings reports.