Gold Traders Await New US Economic Data
On Wednesday, the gold (XAU) price moved sideways within the 2,305–2,320 range as the market turned its attention to US economic data, which could provide more clarity about when the Federal Reserve (Fed) might reduce interest rates.
The US Jobless Claims data will be released today at 12:30 p.m. UTC. Additionally, the preliminary University of Michigan Consumer Sentiment Index report will come out on Friday. According to estimates, the index is projected to drop from 77.2 in April to 76.0 in May. This decline may support the gold price.
"Despite market expectations of a rate cut in September, gold traders are cautious about making big moves. If the US inflation report comes in hotter, then prices could fall to $2,290," said Ajay Kedia, director at Kedia Commodities, Mumbai.
The situation in the Middle East has become more complex. Israeli forces recently launched strikes on a city in the southern region of Gaza. On Wednesday, Hamas stated that it wasn't willing to make further concessions in negotiations with Israel regarding a ceasefire in Gaza. At the same time, the US is calling for peace between the parties and attempting to encourage Israel to engage in dialogue.
US President Joe Biden said on Wednesday in an interview with CNN.
"I made it clear that if they go into Rafah. I'm not supplying the weapons"
The World Gold Council said in a note:
"Central bank demand, investor demand—particularly in East Asia—as well as a persistent geopolitical premium have helped gold dismiss the challenges presented by the current investment environment".
Indeed, the People's Bank of China added 60,000 troy ounces of gold to its reserves in April, extending the period of consecutive purchases to 18 months. XAU/USD continues to move within the 2,305–2,320 range during the Asian and early European trading sessions on Thursday. The market is now waiting for the US Jobless Claims report at 12:30 p.m. UTC. Higher-than-expected figures may support XAU/USD, while lower numbers may bring the pair down.
The Euro Moves Sideways as Fed Officials Stay Hawkish
The euro (EUR) moved sideways on Wednesday, while the US dollar (USD) strengthened due to expectations that the Federal Reserve (Fed) would maintain higher interest rates for longer.
Hawkish remarks from Fed officials supported the US dollar. According to a Reuters report, Boston Fed President Susan Collins emphasised that it may take more time for the US economy to reach the central bank's 2% inflation target. Meanwhile, Minneapolis Fed President Neel Kashkari stated that the regulator probably wouldn't cut interest rates for a significant period, while the possibility of rate hikes hasn't been entirely excluded.
In the eurozone, monthly retail sales figures rose by 0.8% in March after a revised 0.3% decline in February. This marked the highest increase since September 2022, demonstrating resilience in the European consumer sector. Year-on-year retail sales numbers also rose by 0.7%, recovering from the 0.5% drop earlier. Still, the European Central Bank (ECB) seems dedicated to reducing borrowing costs in June. Despite the recent retail sales data, Chief ECB Economist Philip Lane affirmed that the economic outlook strengthened his view of inflation nearing the 2% target.
EUR/USD was moving within a range during the Asian and early European trading sessions. Trading activity will probably be subdued today as German and French markets are closed due to the Ascension Day holiday. US data releases will have a relatively low impact on the currency until Friday's University of Michigan Consumer Sentiment Index. Key levels to watch for the euro are 1.07400 and 1.07600.
Bitcoin Loses Momentum as Issuance Outpaces Accumulation
Bitcoin (BTC) lost 1.87% on Wednesday as BTC holders are accumulating at a slower pace.
According to IntoTheBlock, enthusiasm among large Bitcoin investors appears to be waning. The data shows a reduction in the activity of Bitcoin holders of over 1,000 BTC. A decrease in flows from crypto wallets followed a period of significant accumulation earlier this year, especially during market pullbacks. Each spike in accumulation after price drops is becoming progressively smaller. This trend raises concerns about whales' willingness to buy the dip, especially after Bitcoin's recent halving event and the slowing inflows into spot Bitcoin ETFs.
Since the post-halving correction, BTC/USD has experienced a rest, which provided 'prime buy zones' for late investors. However, data from Glassnode reveals that Bitcoin accumulation hasn't kept pace with the BTC issuance rate. All investor groups have accumulated just over 10,000 BTC over the past 30 days, while 19,000 BTC were issued during the same period. The Accumulation Trend Score is a metric that measures the amount of BTC accumulated by different investor cohorts over the past 15 days. This indicator uses a modified moving average to provide similar insights. After significant accumulation in March, which pushed BTC to its all-time high, all cohorts began selling off their assets. The selling trend has continued, with recent data showing no signs of reversal in this pattern.
BTC/USD rebounded from the 61,000 level in the Asian trading session. Traders should monitor Bitcoin ETFs' inflows and outflows, which can reveal the sentiment of the crypto community. The first significant support is at 60,000. If the pair finishes the day below this level, BTC/USD may drop towards 56,500.