Gold Holds Near the Record High Despite a Slight Dip
The gold (XAU) price dipped slightly on Thursday but remained close to its all-time high from the day before.
Yesterday's US macro data was somewhat mixed. The Philadelphia Fed Manufacturing Index rose to a three-month high. At the same time, closely watched jobless claims figures were higher than expected, ensuring nearly a 100% probability of a rate cut by the Federal Reserve (Fed) in September.
"Analysts foresee long-term gains for the precious metal, driven by the Fed's preparations to cut rates, believing inflation is under control", said Russell Shor, senior market specialist at Tradu.
Meanwhile, the International Monetary Fund (IMF) cautioned the Fed on Thursday, saying that the central bank shouldn't cut interest rates until late 2024.
The fund also urged the government to increase taxes to address the rising national debt. Indeed, the unsustainable growth of US debt is one of the reasons why central banks worldwide have been buying gold, creating a positive medium to long-term outlook for bullion.
Furthermore, some safe-haven demand increases in China ‘because of the negative rhetoric coming from both US presidential candidates towards China’, said Jim Wyckoff, senior market analyst at Kitco Metals. Thus, the recent decline in gold prices could be a technical correction, presenting a long-term buying opportunity.
XAU/USD was falling during the Asian and early European trading sessions.
Today, the formal macroeconomic calendar is light, so the precious metals market will likely be calm. John Williams, the President and chief executive of the New York Fed, will give a speech at 8:40 p.m. UTC. His remarks may provide clues on the US interest rate path.
"Spot gold may test support at $2,417 per ounce, a break below which could open the way towards $2,401", said Reuters analyst Wang Tao.
The US Dollar Strengthened, Pushing Down The Euro
The euro (EUR) lost 0.37% on Thursday as the US dollar (USD) sharply rose despite higher-than-expected Jobless Claims data.
As was widely expected, the European Central Bank (ECB) kept its key rate steady yesterday but gave no hints about its next move. The forward guidance was very vague. The key message from the ECB was that,
"Domestic price pressures remain high’ and that inflation will be above its target ‘well into next year".
Brian Jacobsen, chief economist at Annex Wealth Management said:
"Compared to the Federal Reserve (Fed), the ECB may have been the first to cut, but they won't be the fastest. When the ECB cut last, it was a cautious cut; now every meeting is going to be a live meeting where the data will dictate every move"
Overall, the market still views the ECB as much less dovish than the Fed. This divergence in monetary policy expectations between the two central banks will continue to exert upward pressure on EUR/USD.
Interest rate swap market data currently implies roughly 60 basis points (bps) worth of rate cuts by the Fed and only 40 bps of cuts by the ECB by the end of the year.
EUR/USD was falling during the Asian and early European trading sessions. The macroeconomic calendar is relatively uneventful today, so the short-term bearish trend in EUR/USD may persist.
The bears will likely remain in control as long as the pair is below 1.09000. Today's speech by the President and chief executive of the New York Fed, John Williams, at 8:40 p.m. UTC may add some volatility.
His remarks may provide clues on the US interest rate path and may affect the EUR/USD exchange rate.
Bitcoin Holds Steady Amid Rising ETF Inflows
Bitcoin (BTC) continued to move sideways within the $63,000–$66,000 range on Thursday as BlackRock (NYSE:BLK)'s BTC exchange-traded fund (ETF) investors kept buying.
The BlackRock-issued iShares Bitcoin Trust (NASDAQ:IBIT) gained $107 million on 18 July, marking the ninth consecutive day of inflows, according to Thomas Fahrer, co-founder of the crypto data platform Apollo.
Remarkably, inflows exceeded $100 million in seven of nine days, a rare case in the ETF industry. However, traders aren't greatly optimistic about the cryptocurrency. Positive commentary on BTC on social media has significantly declined compared to four months ago.
Additionally, there is a noticeable increase in traders taking short positions on the asset, according to blockchain market intelligence firm Santiment. Santiment generally measures social sentiment based on Reddit, X, 4chan, and BitcoinTalk.
In the latest edition of ‘The Week Onchain’ newsletter, analytics firm Glassnode dispelled myths about Bitcoin miners driving markets lower.
Glassnode's analysis shows that centralised exchanges and US spot Bitcoin ETFs have a much greater influence on BTC price movements than miners' activity.
The balances of exchanges and ETFs can change by around 4,000 BTC each week, suggesting these entities' market influence is about several times larger than that of miners.
BTC/USD rose slightly during the Asian and early European trading sessions.
Today, the formal macroeconomic calendar doesn't feature any major data releases, so the short-term sideways trend may continue due to a lack of volatility.
According to industry sources, the US Securities and Exchange Commission (SEC) granted preliminary approval to at least three of the eight asset managers planning to launch ETFs tied to the spot price of Ethereum on 23 July. This event may trigger additional volatility in the cryptocurrency market.