Gold stabilizes near 2020 as market focuses on US inflation data
The price of gold (XAU) fell 0.44% on Friday, pressured by elevated Treasury yields ahead of Tuesday's US inflation data. Investors are awaiting more clues on the timing of interest rate cuts by the Federal Reserve (Fed).
“The Federal Reserve is likely to keep rates high for longer, which means most central banks will probably do the same. I think things are trending lower for the price of gold. There is a floor of Pretty strong support at around $1,960 that I don't expect. “We see gold falling,” said Everett Millman, chief market analyst at Gainesville Coins.
In fact, the market believes the Fed will miss its first rate cut in March, while the probability of a 25 basis point (bp) rate cut in May is only around 54%. Therefore, traders generally expect the macroeconomic environment in the US to continue supporting a restrictive monetary policy. Traders believe that the United States will continue to perform well and that inflation will decline. Therefore, any data release that challenges this view will provoke a strong market reaction. For example, if the US consumer price index (CPI) for January comes out lower than expected tomorrow, it is likely to rise sharply.
XAU/USD was essentially unchanged during the Asian and European trading sessions. Thomas Barkin, president of the Richmond Federal Reserve, will deliver a speech today at 5:00 pm UTC. It could affect the price of gold, especially if it clearly indicates the future path of US interest rates. Other than that, the formal macroeconomic calendar is going uneventfully, so XAU/USD may continue to trade sideways with a slight bearish tilt.
EUR/USD nears 1.08000 ahead of tomorrow's US CPI data
The (EUR) gained 0.06% on Friday after the US Department of Labor revised its December inflation data, showing a smaller-than-expected price increase.
Annual revisions released by the US Department of Labor on Friday showed that the US consumer price index (CPI) rose slightly less than reported in December. The data sparked a minor sell-off in the country, but did not change expectations about the timing of interest rate cuts by the Federal Reserve (Fed) this year.
“The revisions were much ado about nothing. This is becoming a trend where a Fed official mentions a data release once, and then everyone waits with bated breath only to find out it's a lot of noise.” “said Brian Jacobsen, chief economist. in Asset Management Annex.
EUR/USD has been rising for four consecutive days, even as European Central Bank (ECB) officials have started to sound more dovish lately. Fabio Panetta, a member of the ECB's Governing Council, said the time was fast approaching for the central bank to cut interest rates. In fact, the market now expects more rate cuts from the ECB than from the Federal Reserve this year. This relative divergence in expectations should put downward pressure on EUR/USD.
EUR/USD continued to rise during the early Asian and European trading sessions. Today's macroeconomic calendar has no major economic releases, so already established trends may continue. However, traders may prefer to close their active positions ahead of tomorrow's US CPI report. Furthermore, EUR/USD is approaching strong resistance at the 1.08000 area and some bulls could close their long positions. Thomas Barkin, president of the Richmond Federal Reserve, will deliver a speech today at 5:00 pm UTC. It could affect the exchange rate of the dollar and related pairs, especially if it clearly indicates the future path of US interest rates.
Bitcoin Hits 2-Year High on Strong ETF-Induced Demand
(BTC) consolidated above 48,000 yesterday, ending the week up 13.50%.
In early February, Bitcoin lacked significant price movements, demonstrating uncertainty among traders. However, the influx of investments in Bitcoin spot ETFs increased demand for the asset and surpassed the 48,000 level for the first time since December 2021. In the first 20 days of operation, Bitcoin spot ETFs have rapidly accumulated impressive figure of 10 billion dollars in assets. under management, demonstrating investor enthusiasm for a new investment approach.
American investment management firm ARK Invest, notably bullish on Bitcoin, predicts that BTC will replace gold as a safe haven asset. Therefore, the cryptocurrency may continue to rise as it becomes an important part of the financial markets. ARK Invest maintains that Bitcoin's resilience to economic shocks, such as interest rate increases and inflation, positions it favorably in the current economic landscape. The recent approval of the Bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission is a crucial event for the market. This progress reflects the growing acceptance of Bitcoin among institutional investors and suggests a shift in its recognition as a valuable asset.
Today, BTC/USD failed to consolidate above 48,500 in the Asian trading session and fell to around 48,000. An important event for Bitcoin is the US Consumer Price Index (CPI) report on February 13 at 1:30 pm UTC. This event may determine whether BTC/USD can surpass its previous high of 49,000, set on January 11. Lower-than-expected CPI numbers may push BTC/USD higher. However, the short-term bullish trend may reverse if actual numbers exceed forecasts.