Analytics

Gold prices have steadied on Wednesday after a six-day rally that pushed the prices to fresh all-time highs in the $2,150 area during the previous session. The yellow metal saw a strong spike towards historical highs before retreating marginally. After the latest rally, gold prices stay upbeat.

The bullion attracted strong demand amid dollar’s retreat. The US dollar keeps trending lower this week, staying under modest bearish pressure for the fourth consecutive session. Last week, the greenback briefly peaked around 104.30 before attracting selling interest to settle below 104.00. The greenback looks bearish today, with the 103.90 immediate resistance staying in the market focus at this stage.

Despite persistent bullishness in the gold market, the downside potential is rising at this stage, as investors may proceed to profit-taking after the spike. Following peaking, the bullion has settled slightly below the upper end of the extended trading range.

$2,100 in focus ahead of US data

The XAUUSD pair stays above $2,100, struggling for direction so far. On the weekly timeframes, the technical picture turned positive, with wider picture staying upbeat after reaching fresh all-time highs. On the upside, the immediate significant target is now represented by the $2,150 zone. Downside risks are limited while above the $2,100 zone.

Later in the week, the precious metal could be affected by dollar’s reaction to a key US jobs report that will set the tone for markets ahead of the weekend. Should the release reveal a weaker employment growth after a spectacular rise in January, the greenback may extend the decline across the board, thus adding to gold’s positive momentum. A decisive break above $2,140 would pave the way to fresh record highs beyond the $2,150 yesterday’s top.

Oil prices are set to finish the week with gains, staying within a relatively tight trading range these days. Earlier in the week, Brent crude briefly peaked at $84.30 for the first time since late January, but failed to preserve gains and has retreated partially since then. During the European session on Friday, oil futures have settled around $82.70, adding nearly 1% on the day.

Oil traders are fairly optimistic in anticipation of OPEC+ decision. The alliance is widely expected to extend its production cap deal, tightening supply further. As a reminder, OPEC initially agreed to reduce combined supply by 2.2 million bpd over the first quarter. Some traders even expect the group to extend the cuts until the end of the year. The decision on extending production cuts is expected in the first week of March.

Mixed signals from industry and economy

In other industry news, the EIA report this week showed that US crude oil inventories rose by 4.2 million barrels in the week ending February 23, compared with expectations for a 2.7-million-barrel rise. On the positive side, gasoline stocks fell by 2.8 million barrels, while distillate stockpiles were down by 510,000 barrels, versus expectations for a 2.1-million-barrel drop.

Meanwhile, fresh economic data out of the United States showed that January’s personal consumption expenditures index was in line with expectations. The report supported oil prices as the figures keep the possibility of a June interest rate cut on the table.

On the other hand, data from China, the world’s largest oil consumer, capped positive momentum in the oil market as the country’s manufacturing activity continued to contract for the fifth consecutive month. A weak release added to demand concerns among oil traders.

The price of bitcoin has exited its consolidation mode to make a decisive breakout. The BTCUSD pair has been rallying aggressively for the third session in a row. In the process, the coin exceeded several resistance levels to climb to November 2021 highs around $59,400.

As such, bitcoin is now within striking distance from the $60,000 psychological level that represents the immediate upside target at this stage. After the latest spike, BTC has settled around $59,000, deciding on the further direction.

One of the key reasons behind the current rally is the upcoming halving event due in mid-April. Bitcoin halving, which happens every four years, has traditionally been associated with rising prices. After the event, reward miners get will be halved from 6.25 bitcoin to 3.125.

Bulls set the tone

Also, euphoric sentiment in the cryptocurrency market is due to renewed interest in the cryptocurency after the U.S. approved the first bitcoin spot ETFs. By the way, the trading volume of nine bitcoin ETFs in the United States reached a new high of $3.2 billion last week.

Adding to an upbeat tone in the cryptocurrency market, MicroStrategy revealed earlier in the week that it has bought this month 3,000 bitcoin for $155.4 million. The cloud service firm now owns a total of 193,000 coins worth about $10 billion.

Since the start of the year, bitcoin has risen more than 30% to rise add over 10% this week. Now, BTC is a less than $10,000 away from the all-time high it hit in November 2021, of around $69,000.

In the near term, a decisive break above the $60,000 handle would open the way towards the $64,000 mark that represents the intermediate barrier on the way to the mentioned all-time tops registered in November 2021.

Oil prices refreshed February highs during the previous session before retreating on Friday. Brent crude extended the ascent to the $84 handle that capped the rally and triggered some profit-taking ahead of the weekend. In the process, oil futures fell back below $83 a barrel to turn negative on the weekly charts after two weeks of gains in a row.

The recent rally in the oil market was due to a combination of persistent uncertainty over the geopolitical outlook in the Middle East and signs of a tightening global market amid the weather-related disruptions. Also on the positive side, compliance with OPEC+ production cuts has increased with exports falling to the lowest level since August this month.

On the data front, the US commercial crude stockpiles rose by 3.5 million barrels last week, according to the Energy Information Administration. The figure came in slightly under expectations and well below estimates from the API which revealed a 7-million-barrel build in crude stocks. Distillate inventories declined a little over 4 million barrels, while gasoline was up 415,000 barrels.

Brent needs to stay afloat

In the near term, Brent crude needs to hold above the $82 figure in order to stay afloat and refrain from a deeper retreat towards the $80 psychological level last seen on February 8. The overall risk sentiment looks upbeat now, suggesting oil could cling to the current levels at this stage, especially as the dollar struggles to attract renewed demand after the recent slide.

In a wider picture, oil futures extend their recovery this since January after a major decline witnessed in November and December. Should the upside momentum persist in the weeks to come, Brent crude may retarget October highs seen above 107.00.

Gold prices opened higher Wednesday, retaining bullish bias for the sixth session in a row. Earlier in the day, the bullion saw a brief spike towards nearly two-week highs seen around $2,043. Despite the latest bounce, gold prices remain vulnerable, with downside potential persisting at this stage, albeit the bearish pressure has abated significantly over the last days.

After a jump to the mentioned highs, the pair retains the recovery momentum, with the immediate outlook neutral.

Following peaking around $2,045 earlier in the month, the bullion has settled back above the $2,000 psychological level that was last seen on Friday. The XAUUSD pair has settled slightly above this mark, deciding on further direction. As such, the technical picture has improved somehow, with upside risks persisting while above $2,000.

On the weekly timeframes, the technical picture turned more upbeat, with wider picture staying neutral after reaching fresh all-time highs in December. On the upside, the immediate significant target is now represented by the $2,045 zone.

FOMC in focus

In the near term, gold could be affected by the FOMC meeting minutes through the dollar’s reaction to the release. The greenback turned positive on Wednesday, holding mostly above the 104.00 figure yesterday’s slide.

Should the Fed express a more hawkish tone than expected, the buck may jump across the market. In this scenario, the yellow metal would come under some selling pressure and may threaten the $2,025 intermediate support, a decisive break below which would bring the $2,000 mark back in the game.

In a wider picture, the outlook for gold continues to hinge on Fed policy. Should rate cut expectations continue to abate, the XAUUSD pair may come under renewed selling pressure. On the positive side, geopolitical tensions across the globe continue to support the safe-haven yellow metal.

Bitcoin looks set to finish another week with solid gains, retaining bullish bias for the fourth week in a row. During the previous session, the BTCUSD pair refreshed late-2021 highs around $52,700 before retreating marginally. On Friday, the coin struggles for direction below $52,000, suggesting buyers could pause before another attack takes place. During the recent ascent, the digital currency regained the $1-trillion market capitalization for the first time since December 2021.

Apart from the ETF-related demand, bitcoin price has also been lifted by hopes that the US Federal Reserve will start cutting interest rates this year. Of note, a fresh report out of the United States showed that retail sales dropped 0.8% in January versus the expected decline of 0.3%. Poor figures softened the inflation outlook and fueled expectations of an earlier rate cut by the Fed.

Against this backdrop, BTC rallied along with other risky assets, including Wall Street equities. Overnight, the S&P 500 index closied at a new record high. The broad stock index climbed 0.58% to register the 11th all-time high since the start of the year.

Halving round the corner

Besides, echoing a trend observed in previous bitcoin cycles, the current dynamics aligns with a pre-halving rally, suggesting the ascent could persist despite some overbought signals. Furthermore, this rally has the potential to push the coin beyond previous cycle highs amid consistent daily inflows into ETFs. The bitcoin halving, which occurs approximately every four years, will likely occur in April.

Technically, the outlook for the largest cryptocurrency by market capitalization remains upbeat. However, there could be some hesitation in the near term. It is possible that BTC will see a local downside correction before buyers reenter the game to push the prices to fresh multi-year highs around the $53,000 figure that represents the immediate significant bullish target.

The US dollar has steadied around the upper end of the extended trading range, holding slightly below the 105.00 figure on Wednesday. This level now represents the immediate upside barrier last seen in mid-November.

The USD index jumped along with Treasury yields amid strong inflation data that made traders pare back expectations for the pace of rate cuts by the Federal Reserve this year. The report showed that the consumer price index rose 0.3% in January, up from a 0.2% increase the previous month. Compared with a year ago, prices were up 3.1%, well above forecasts for a 2.9% increase. Investors now expect the Fed to first cut its interest rate in June or even July.

Against this backdrop, equities fell across the market, while the yield on the 10-year Treasury note jumped to 4.32%, its highest level since late November. The two-year Treasury yield saw its biggest one-day move since last March after inflation data took a March rate cut off the table, and it made a May cut unlikely.

105.00 in focus

After the rally, the dollar may hesitate for some time in anticipation of fresh short-term drivers, while a wider outlook keeps improving as chances of a rate cut keep abating. Moreover, some traders started to express concerns over a possible rate hike by the Fed amid a stubborn inflation and a resilient economy, including tight labor market.

Now, the greenback needs some more impetus to challenge the 105.00 barrier on the way to fresh highs. On the downside, the nearest support arrives around 104.50. The technical picture on weekly timeframes reflects a steady uptrend that has been in place since late-December. A decisive break above 105.00 would pave the way to the 105.80 intermediate resistance on the way towards 106.00.

Oil prices have been trending north since the start of the week, recovering from mid-January lows registered around $76.70 a barrel. Since then, Brent crude has climbed to the $79 zone that remains in the market focus after a rejection from the $79.65 area earlier on Thursday.

Despite the bounce, oil stays vulnerable after last week’s steep losses, with buying interest limited at this stage. Besides, Brent remains below the $80 psychological level, a decisive break above which is needed for bullish extension.

Oil futures advanced in response to a short-term energy outlook released by the US Energy Information Administration this week. According to the EIA, crude oil production in the country is not expected to exceed the record set in December until February 2025. Also, the organization revised its forecast for oil output growth in 2024, lowering it by 120,000 barrels per day.

Geopolitics and USD support prices

Also, oil continues to derive support from the intensification of geopolitical tensions in the Middle East after Israel’s rejection of a ceasefire proposal from Hamas.

The recent decline in US dollar added to bullishness in the oil market as well. The USD index has settled around 104.00 after a rejection from the 104.60 local resistance earlier in the week, supporting higher oil prices, as crude becomes less expensive in non-dollar terms.

In the near term, Brent crude needs to hold above $79 to confirm the latest breakout on a daily closing basis. Otherwise, the $77 mark will come back into the market focus. Should dollar demand pick up any time soon, oil futures will struggle to attract more robust demand and could get back under selling pressure instead. In a wider picture, oil stays bearish since peaking just below $98 in September.

The euro makes modest recovery attempts after a plunge to December lows around 1.0723 during the previous session. The shared currency came under severe selling pressure from the rallying dollar and Treasury yields.

Demand for the greenback intensified after fresh data showed that the ISM Services PMI rose to 53.4 from 50.5 in December to beat the market expectation of 52.0, suggesting the Fed could pause longer before cutting rates. Of note, Powell said over the weekend that the central bank is unlikely to begin in March, as many investors had earlier hoped.

Still, the US dollar has steadied after three bullish sessions in a row. At the start of the week, the USD index briefly peaked at 104.60 before retreating partially amid some profit-taking. Since then, the greenback has settled around 104.35, trading under some selling pressure on Tuesday as risk sentiment has improved somewhat after yesterday’s dip on Wall Steet.

On the downside, the immediate support now arrives around the 104.00 figure, followed by the 103.80 zone. Should demand reemerge any time soon, the dollar may get back above the 104.50 region.

EUR to stay defensive

Against this backdrop, the EURUSD pair came off the mentioned multi-week lows to settle around 1.0750. Despite a bunce, the euro stays vulnerable and bearish, especially as the prices hold below both the 200- and 100-DMAs.

On the data front, Germany’s factory orders jumped 8.9% on a monthly basis, as against a 0% reported in November. On a yearly basis, industrial orders rose at a rate of 2.7% versus the previous drop of 4.7%. Still, an upbeat report failed to fuel more robust gains for the shared currency, pressured by Fed’s hawkishness. As such, the euro is likely to stay on the defensive at this stage, while the greenback may retest the 104.50 region in the near term if investor sentiment deteriorates again.

Earlier in the week, the bitcoin price surged to mid-January highs around $43 800 before attracting selling interest around fresh local peaks. As a result, the coin slipped to the $42,000 region, holding in negative territory for the third session in a row on Thursday.

As the largest cryptocurrency by market capitalization failed to challenge the $44,000 mark, bearish signs appeared in the daily timeframes, with market focus shifting back to the $40,000 psychological level. A breach below this critical support could lay the groundwork for a near-term downtrend. However, such a scenario looks unlikely at this stage, with the overall tone looking relatively upbeat.

BTC disappointed by Fed’s hawkishness

The recent dip in the cryptocurrency market was due to the fact that the US Federal Reserve kept interest rates at their current level on Wednesday, but noted that it won’t be appropriate to cut rates until it has gained greater confidence that inflation is approaching its 2% goal. After the meeting, the dollar surged across the board while stocks slipped along with cryptos.

As the US central bank dampened any hope of rate cuts next month, risky assets and BTC came under pressure. The price of bitcoin fell over 2% following the FOMC announcement as the bank reiterated its hawkishness, saying that inflation remains at a level where rate cuts are by no means a certainty.

In the near term, the BTCUSD pair needs to hold around $42,000 in order to avoid another sell-off that could push the prices towards $40,000. On the upside, the resurgent demand could send the digital currency back to the mentioned highs registered slightly below the $44,000 key mark, followed by the $46,000 intermediate barrier on the way to late-2021 highs seen last month around $48,800.