Analytics

Gold prices climbed back above the 20-DMA this week as the precious metal managed to shrug off the recent pressure, with downside potential looking limited at this stage. After last week’s dip, the XAUUSD pair keeps advancing gradually, with the immediate outlook improving after a bounce above the mentioned SMA that was capping the upside potential earlier.

Following peaking just below $2,050 during the previous session, the bullion has settled marginally below the $2,040 region on Wednesday, trading slightly positive on the day. As such, the technical picture has improved further, with downside risks abating while above $2,030. Should gold stay below the $2,040 immediate resistance in the near term, however, the $2,020 mark may be threatened.

In the immediate term, the downside pressure could reemerge if the Fed fuels dollar rally by striking a less dovish tone than expected. The central bank is widely expected to leave interest rates unchanged today, but investors will focus on the central bank’s tone on potential monetary easing.

The $2,040 zone in focus

In anticipation of the Fed’s verdict, the US dollar holds steady, trading in positive territory for the fifth week in a row. The greenback turned flat in recent trading after facing resistance in the 103.82 area earlier in the day as traders are getting more cautious ahead of the outcome of the Fed’s meeting that will set fresh direction for the currency. As such, the USD index is back around 103.50, struggling for direction during the European hours.

On the weekly timeframes, the technical picture for gold turned more positive, with wider picture staying upbeat as well after reaching fresh all-time highs last month. On the upside, the immediate significant target is now represented by the $2,040 zone, followed by the $2,050 barrier. On the flip side, the nearest support lies around $2,030, followed by the $2,024 mark, where the 20- and 55-DMAs arrive, respectively.

Oil prices were mostly higher during the week to hit late-November highs around $82.60 during the previous session. On Friday, Brent crude came off peaks to settle below the $82 mark as the buying pressure has abated after the recent rally. On the weekly timeframes, the technical picture has been improving during the month.

The surge in oil prices this week was due to a number of factors, including the release of strong US economic growth data for the fourth quarter. The US economy grew at a rate of 3.3% in the fourth quarter versus the 2% expectation, underlining the continued resilience of the economy as robust consumer spending and government outlays contributed to the growth.

Escalating tensions in the Red Sea, making traders express concerns about the prolonged disruptions to the global supply chain, added to positive momentum as well.

Additionally, Brent crude derived support from a larger-than-expected draw in US crude inventories last week. According to the Energy Information Administration, inventories fell by 9.2 million barrels by the end of the week, versus expectations of a decline of 1.2 million barrels. Furthermore, production in the US fell by 1 million barrels per day to 12.3 million barrels per day in the wake of severe winter storms.

Strong USD caps gains

On the negative side, the upside momentum for oil has been capped by a stronger dollar that continues to derive support from the waning expectations for an early rate cut by the Fed.

The US currency stays upbeat, holding in bullish territory for the fourth week in a row.

In the near term, Brent crude needs to regain the $82 figure in order to extend the ascent and target fresh multi-week highs. A decisive break above $82.60 would pave the way to the $83.25 intermediate barrier on the way towards the $84 handle. However, should the greenback see another rally in the near term, oil prices may see a deeper profit-taking ahead of the weekend.

The greenback is under pressure across the board on Wednesday amid lower yields and more positive risk sentiment in the financial markets. After peaking at mid-December highs around 103.80 yesterday, the USD index retreated back to the 103.00 figure that remains in the market focus.

A failure to hold above this level would pave the way to a deeper retreat in the near term. In a wider picture, however, the buck remains relatively upbeat as March rate-cut expectations continue to ebb amid strong economic data in combination with hawkish hints from Fed officials.

As the dollar struggles, USDJPY loses ground as well. After some consolidation just above the 148.00 figure, the pair slipped to the 147.40 zone, holding above the 147.00 support that was briefly derailed during the previous session as the Japanese yen surged across the board in the aftermath of the Bank of Japan policy meeting. The central bank retained its ultra-loose policy, saying 2% inflation target is in sight. Still, the bank lowered its forecast for core CPI for fiscal 2024, suggesting that monetary authorities might not rush to immediately begin tightening the ultra-loose policy.

Dip buying stays relevant

As the pair failed to hold above 148.50, the prices slipped back to the directionless 100-DMA, today at 147.50. Despite the retreat, the downside potential for the dollar remains limited amid diminishing odds for a more aggressive policy easing by the Federal Reserve, which support prospects for some dip-buying around the USD/JPY pair.

Safe-haven Japanese yen derives support from geopolitical tensions and the fact that the economic outlook, especially in China, remains uncertain. By the way, as the economy continues to struggle, China announced on Wednesday fresh measures to boost bank lending. In particular, the People's Bank of China said it would next month lower the amount of cash banks must keep in reserve.

Bitcoin is mostly lower this week, extending its retreat from long-term highs registered around $48 750 earlier in the month. This week, the coin failed to hold above the $43,000 figure to attract renewed selling pressure that intensified during the previous session. The BTCUSD pair extended losses to $40,700 before bouncing marginally in recent trading.

The largest cryptocurrency by market capitalization looks set to finish the second bearish week in a row, extending its retreat from the mentioned late-2021 highs. Now that the prices have settled above the $41,000 mark, bitcoin needs to decide on further direction, trading unchanged on Friday.

Bitcoin has declined more than 10% over the past week to tumble to the lowest price in a month as the ETF-related hype has faded somehow. In the last 24 hours, bitcoin’s market cap slipped to $806 billion while trading volumes rose over 30%.

Downside risks persist

The downbeat tone in cryptos is in sync with mostly negative sentiment in traditional financial markets as investors express concerns over a strong labor market that may mean fewer rate cuts from the Fed than many are expecting. After yesterday’s tech-led rally on Wall Street, risk demand is waning on Friday, with downside risks persisting for risky assets.

In the immediate term, the bitcoin price needs to hold above $41,000 in order to make some fresh recovery attempts and avoid a decline towards the $40,000 psychological level last seen in December. On the upside, a decisive break above $41,600 would pave the way towards the $43,000 figure, followed by this week’s highs in the $43,600 area. However, it looks like BTC will continue to struggle at this stage, oscillating around the $41,000 mark.

Gold prices has steadied after a solid slide witnessed during the previous session amid the rallying dollar. During the recent slide, the precious metal dipped back below the 20-DMA after peaking above $2,060 late last week.

Earlier in the day, the metal extended losses to $2,017 to settle slightly above the $2,020 in European deals. As such, the technical picture has deteriorated, with downside risks persisting. Should gold stay below the $2,030 immediate resistance in the near term, further profit-taking could be expected.

On the weekly timeframes, the technical picture has deteriorated somehow, while a wider picture remains relatively upbeat after reaching fresh all-time highs last month. On the upside, the immediate significant target is now represented by the $2,044 zone there the 20-DMA lies. On the flip side, the nearest support lies around $2,014, where the 55-DMA arrives.

Gold takes cues from USD

Of note, the XAUUSD pair once again derived support from the 55-DMA that capped losses last week as well. As such, downside risks stay limited while above this moving average and the $2,000 psychological level last seen more than two months ago.

In the immediate term, gold will continue to take cues from the dollar’s tone. The USD index has accelerated its ascent overnight after some hesitation at the start of the week, trading with a modest bullish bias on Wednesday as risk sentiment looks downbeat in the global financial markets.

As Treasury yields jumped, USD bulls managed to push the prices back above the 103.00 level. As such, the USD index came across local resistance around 103.60 to settle the flat-line in recent trading as traders opted to take some profit after a rally towards one-month highs.

Oil prices rallied on Friday after the UK and the United States carried out military strikes against targets in Houthi-controlled areas of Yemen. The Houthis have been attacking vessels in the Red Sea, targeting global shipping vessels. Against this backdrop, major shipping companies stopped traversing the Suez Canal and Red Sea routes last month.

As such, after finishing higher on Thursday, Brent crude extended gains today to exceed the $80 psychological level for the first time since late-December. Earlier in the week, the futures found a local bottom around $75.25 a barrel before reversing losses amid rising geopolitical tensions.

In other news, Energy Information Administration inventory data registered a surprise jump in US crude stockpiles of 1.3 million barrels versus market expectations for a draw of 700,000 barrels. Besides, the release reflected a second straight week of massive builds in gasoline and distillate stockpiles.

Oil could target December highs

Meanwhile, fresh data out of China added to upbeat tone ahead of the weekend. Beijing reported that its exports and imports rose last month, while consumer prices fell 0.3% in December, the third consecutive month of declines.

In the near term, Brent crude could extend the ascent due to geopolitical concerns in combination with Fed rate cut expectations. Of note, the release on Thursday reflected a 0.3% increase in consumer prices for the month, pushing the annual rate to 3.4% versus 0.2% and 3.2% expected. Even as the data suggests that interest rate cuts by the Fed may be slower to come, risky assets refraned from a plunge after the release.

Oil prices could target last month’s high of $81.70 if the rally continues, with the intermediate barriers coming at $80.60 and $81.30. On the flip side, a retreat below $80 would pave the way to $78.60.

The price of gold stays positive on Wednesday after a slide witnessed at the start of the week, with downside momentum looking limited at this stage. After a dip below the ascending 20-DMA for the first time since mid-December, the XAUUSD pair stays vulnerable despite some bullish attempts.

The metal extended gains to $2,035 zone in recent trading to settle slightly below the 20-DMA. As such, the technical picture has improved slightly, but the momentum still looks too modest. Should gold stay below the $2,045 immediate resistance in the near term, another retreat could be expected.

Of note, the bullish potential remains limited as the dollar holds relatively steady these days. Still, the greenback struggles for clear direction these days even as investor sentiment in the global financial markets has deteriorated recently. The USD index holds below 102.50 on Wednesday after last week’s rejection from the levels above the 103.00 figure.

Focus on the US

On the weekly timeframes, the technical picture has deteriorated somehow, while a wider picture remains relatively upbeat after reaching fresh all-time highs last month. On the upside, the immediate significant target is now represented by the $2,050 psychological level. On the flip side, the nearest support lies around $2,025, followed by the ascending 55-DMA, today at $2,010.

As traders questioned bets on early interest rate cuts by the Federal Reserve amid recent signs of resilience in the labor market, gold struggles to stage a mode decisive ascent at this stage. Focus now shifts to upcoming US consumer price index data, which could affect rate-cut expectations and thus set fresh direction for the precious metal through the dollar’s reaction. The CPI report due on Thursday is expected to show inflation grew slightly last month.

After beginning the week and the year at fresh long-term highs, the price of bitcoin has retreated partially. Still, the coin remains elevated, holding around the $44,000 figure ahead of the weekend.

Earlier in the week, the BTCUSD pair peaked at $45,900 for the first time since April 2022 before finding resistance that triggered short-lived but fairly aggressive profit-taking. During the subsequent decline, the largest cryptocurrency by market capitalization found support around $40,500 to attract renewed buying pressure eventually.

Cryptocurrency traders are nervous ahead of the upcoming SEC decision on the many spot Bitcoin ETF applications. According to the latest reports, the Commission is reportedly finalizing the review of applications for the much-anticipated ETFs. As the January 10th decision deadline approaches, the agency could start notifying issuers of their approval as early as today.

Cryptos buoyed by SEC-related optimism

In a wider picture, expectations of interest rate cuts by the US Federal Reserve provide an upbeat outlook for risky assets, including cryptocurrencies. However, these days, investors express uncertainty around when the Fed will begin to cut rates, especially as the minutes from the central bank's latest monetary-policy meeting didn’t offer a timetable on possible reductions. Despite risk aversion dominating traditional financial markets these days, cryptocurrencies look upbeat due to SEC-related optimism. Meanwhile, US stocks closed mostly lower on Thursday, with the S&P 500 notching a four-day losing streak.

In the near term, the bitcoin price needs to hold above the $44,000 figure in order to target the $44,800 next barrier, followed by the $45,500 hurdle. Depending on the news from the SEC, the digital coin may target fresh long-term highs beyond $46,000 in the days to come. On the downside, the immediate significant support now arrives in the $42,700-$42,600 area, followed by the $42,200 zone.

After starting the year on negative footing, oil prices resumed the ascent to stage a solid bounce during the previous session. On Thursday, Brent crude extended the ascent towards $79.40 before retreating marginally as the bullish momentum has waned somehow.

Following a four-day decline, oil futures gained around 3% on Thursday amid concerns about Middle Eastern supply following disruptions at a field in Libya where local protests forced a full shutdown of production at Sharara. The oilfield, one of the country’s largest, can produce up to 300,000 barrels per day. Persisting tension around the Israel-Gaza war added to the bullish momentum in the market.

In other industry news, the American Petroleum Institute reported that US crude stockpiles fell by 7.4 million barrels last week, which was double the expected figure. On the negative side, gasoline inventories rose nearly 7 million barrels versus the expected 200,000-barrel drop. Distillate stockpiles also rose more than expected. Later in the day, weekly data from the Energy Information Administration is due. The report is delayed by a day due to the New Year’s holiday on Monday.

$80 in focus

Brent crude failed to hold above the $79 figure earlier in the day to settle just below this level during the European session on Thursday. The overall technical picture has improved somehow, but the futures are yet to regain the $80 level in order to show a more sustained bounce from multi-month lows registered last month around $72.30 a barrel.

In the immediate term, oil prices could continue to flirt with the $79 mark that represents the immediate barrier for buyers. A decisive break above this level would pave the way towards the $79.40 zone, followed by $80 a barrel. On the flip side, the nearest support now arrives at $78.30, followed by the $77.40 region. In a wider picture, Brent crude looks downbeat following three months of losses, staying well below the $90 psychological level last seen in October.

The price of bitcoin keeps struggling for direction these days, shuffling between gains and losses as the recent rally waned. After yesterday’s losses, the coin stays under some pressure on Friday, holding in the negative territory on the weekly timeframes.

Despite indecisive dynamics, the largest cryptocurrency remains afloat, holding above the $42,000 mark that was briefly derailed earlier in the week. As a reminder, the BTCUSD pair rallied to April 2022 highs around $44,700 this month before retreating marginally. The fact that bitcoin refrains from a deeper correction at this stage, suggests bulls remain in the game due to the much-anticipated bitcoin spot ETF approval as soon as early January. The market seems to be almost certain that the SEC will give permission for spot Bitcoin ETFs before January 10.

Outlook relatively upbeat

Also, the upbeat sentiment in the cryptocurrency market has been fueled by expectations of declining interest rates in the US. There are now growing expectations that the US Federal Reserve will initiate interest rate cuts in March 2024. Against this backdrop, the US dollar keeps losing ground, trading around July lows, thus adding to bullish tone surrounding the digital currency. The USD index slipped to 100.60 before bouncing back above 101.00 in recent trading.

After finding support around $41,700, the bitcoin price has settled around $42,500 today, with the immediate barrier arriving at $42,900, followed by the $43,700-$43,800 region, a decisive break above which would shift focus back to the mentioned long-term highs. On the flip side, a failure to hold above $42,200 would open the way towards this week’s support that should cap the potential selling pressure and trigger another bounce in thinner pre-holiday trading. The overall short-term outlook remains relatively upbeat.