Gold Breaks Above $2300 On Soften Dollar

* Gold Prices reached above the $2300 mark as the dollar further easing.

* Dovish stance from Fed’s Powell hammers dollar lower.

* All eyes on Friday NFP to gauge the strength of the dollar.

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Fundamental Overview

Gold prices have surged past another milestone, firmly holding above the $2300 mark, driven by growing market sentiment favouring a Federal Reserve interest rate cut later this year. Federal Reserve Chair Jerome Powell’s recent speech reinforced this sentiment, emphasising the need for continued assessment of market conditions before considering any reduction in borrowing costs. Despite recent inflationary indicators, the Fed’s plan for a rate cut in 2024 remains intact. Powell’s dovish tone during the speech prompted a 0.5% decline in the dollar during the last session, thereby bolstering gold prices further.

In contrast, the eurozone’s Consumer Price Index (CPI) readings unveiled yesterday fell short of expectations, indicating that the region is still some distance away from achieving its targeted 2% inflation rate. This has weighed on the euro’s strength, with speculations emerging about a potential early rate cut by the European Central Bank (ECB). Traders are eagerly awaiting the release of the ECB monetary policy meeting minutes later today to glean insights into the euro’s trajectory and any potential policy shifts by the ECB.

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Current rate hike bets on 1st May Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (85.5%) VS -25 bps (14.5%)  

Market Overview

(MT4 System Time)

Source: MQL5 

Economic Calendar

(MT4 System Time)

Source: MQL5 

Market Movements

DOLLAR_INDX, H4

The Dollar Index experienced a slight decline following the release of a disappointing US jobs report, as JOLTs Jobs Opening figures fell slightly short of market expectations at 8.756 million compared to the anticipated 8.760 million. However, the dollar’s long-term outlook remains bullish, supported by strengthening US Treasury yields and expectations of a prolonged period of high interest rates by the Federal Reserve.

Currently, the Dollar Index is trading lower after retracing from the resistance level. The MACD indicator shows increasing bearish momentum, while the RSI stands at 57, suggesting the index may extend its losses towards the support level, as the RSI retreated sharply from overbought territory.

Resistance level: 104.95, 105.40

Support level:104.60, 104.00

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XAU/USD, H4

Gold prices continued their upward trend amidst weak risk appetite, driven by ongoing geopolitical tensions and anticipation of market volatility surrounding the US elections. Despite the surge in US Treasury yields, gold remained appealing to investors seeking safe-haven assets amid uncertainty.

However, concerns persist regarding the potential impact of a high interest rate environment from the Federal Reserve on gold’s gains. Currently, gold prices are trading higher following a breakout above the resistance level. The MACD indicator shows diminishing bullish momentum, while the RSI stands at 72, suggesting the commodity may enter overbought territory.

Resistance level: 2295.00, 2305.00

Support level: 2280.00, 2265.00

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CL OIL, H4

Crude oil prices surged further following a bullish inventory report released by the American Petroleum Institute (API), revealing a larger-than-expected decline in US crude stockpiles. The reported drop of approximately 2.3 million barrels exceeded market forecasts, which anticipated a decrease of around 2 million barrels. This unexpected reduction has fueled optimism among investors, indicating potential tightening of supply conditions and heightened demand in the market. Traders are now eagerly awaiting additional insights from the Energy Information Administration (EIA) crude oil inventory data to gauge further market dynamics.

Oil prices are currently trading higher and are testing the resistance level. However, despite the bullish momentum, the Moving Average Convergence Divergence (MACD) indicator suggests a decrease in bullish strength, while the Relative Strength Index (RSI) stands at 74, indicating a possibility of the commodity entering overbought territory.

Resistance level: 85.45, 89.10

Support level: 83.15, 80.20