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Gold Surges Amid Middle East Tensions; Euro Tumbles Despite Disappointing US Data

Published 06/21/2024, 04:43 AM
EUR/USD
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GBP/USD
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USD/CHF
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XAU/USD
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GC
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DXY
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BTC/USD
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BTC/USD
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Gold Is Rising After News From the Middle East

At the close of yesterday's session, the XAU/USD pair rose by 1.36%, showing the largest daily growth in the last month. The price broke through the resistance level of 2,340.00, followed by an increase to 2,360.00.

The rise in gold prices is largely facilitated by 2 factors: tensions in the Middle East and growing expectations for a rate cut in the United States this year, and possibly more than once. Firstly, the continuing news about the Israeli-Palestinian conflict has the greatest effect on the price. Actively growing geopolitical tensions are encouraging investors to move into protective assets. As reported by Reuters:

"On Thursday, several Israeli air strikes in the Gaza Strip killed at least 14 people and wounded dozens of others".

In addition to the news from the Middle East, gold prices are supported by the possibility of repeated Fed rate cuts based on the latest data published in the United States.

On Thursday, the US Unemployment Reports were also released, the results of which could add momentum to the market, but the data was mixed. The number of initial applications for unemployment benefits in the United States decreased compared to the previous report. At the same time, data on the volume of new housing construction showed a decline to the lowest level in almost four years. This indicates moderate economic activity in the second quarter. Spot gold prices rose 0.1% to $2,360.95 per ounce as of 3:44 a.m. UTC after hitting a two-week high in the previous session. Bullion has risen in price by more than 1% in a week. US gold futures rose 0.2% to $2,374.60.

Gold has a lot of room for further growth, given the news from the Middle East. The price resistance level is 2,380.00, and the support is 2,340.00.

Euro Tumbles Despite Disappointing US Data: Rate Differential, Global Uncertainty Take Center Stage

The euro (EUR) lost 0.39% on Thursday despite the fact that the US macroeconomic statistics generally came out weaker-than-expected.

The US Building Permits and Philadelphia Manufacturing Index both came out lower than the market anticipated, but that did not hurt the US Dollar Index (DXY). On the contrary, DXY gained 0.41% yesterday, driven by a drop in other major currencies—particularly the British pound (GBP) and the Swiss franc (CHF). Indeed, traders attribute yesterday's rally in the greenback to the growing interest rate differential between the US and the rest of the world. Currently, the Federal Reserve (Fed) appears to be less dovish in its monetary policy, exerting a cautious approach to future rate cuts. Conversely, other major central banks remain committed to easing their policies. In fact, the Swiss National Bank (SNB) unexpectedly cut its base rate yesterday, while the Bank of England (BoE) suggested that an early rate cut is possible. Furthermore, upcoming elections in France and the United Kingdom can give the dollar an additional boost.

"Political uncertainty around the world is going to continue to give the dollar a bit of strength until those events are settled and markets can adjust to a new political order." said Helen Given, associate director of trading at Monex USA, in Washington D.C.

EUR/USD was rising during the Asian and early European trading session. Today, traders should focus on the string of Purchasing Managers Indices (PMIs), which will be released throughout the day. German PMI is due at 7:30 a.m. UTC, the eurozone PMI is due at 8:00 a.m. UTC, while the US PMI is due at 1:45 p.m. UTC. All three reports have the potential to significantly impact EUR/USD. Higher-than-expected PMIs normally produce a bullish impact on the currency. In case the eurozone figures disappoint, while the US figures surprise on the upside, EUR/USD will likely drop below the important 1.07000 level.

Bitcoin Struggles to Maintain Gains Above $65,000

Bitcoin (BTC) reached the level of 66,400 on Thursday but failed to stay above 65,000 by the end of the day.

BTC, the leading cryptocurrency, has regained momentum, rebounding from a weekly low of $64,000 to find support above $65,000, halting last week’s downtrend. This price recovery may be attributed to another significant investment round by the business intelligence company MicroStrategy, spearheaded by Bitcoin advocate Michael Saylor. The company announced on Thursday the acquisition of an additional 11,931 BTC worth approximately $786 million, further cementing its status as a major institutional holder of the digital asset.

MicroStrategy’s chairman and co-founder, Michael Saylor, announced the purchase of 11,931 Bitcoin between April 27 and June 19 for $786 million. This acquisition raised the company’s total Bitcoin holdings to 226,331 BTC, bought at a total cost of $8.3 billion, now valued at approximately $14.9 billion. Saylor began investing in Bitcoin in 2020 as a hedge against inflation and a cash alternative. Since then, Bitcoin has surged by around 600%. Despite this, market sentiment towards Bitcoin remains mixed, with market intelligence platform Santiment noting the community’s fear or disinterest as Bitcoin’s price fluctuates between $64,000 and $65,000.

BTC/USD fell slightly during the Asian and early European trading sessions. Today, S&P Global will be releasing its latest Purchasing Managers Indices (PMI) for a number of major economies. The eurozone PMI is due at 8:00 a.m. UTC, UK PMI is due at 8:30 a.m. UTC, while the US PMI is due at 1:45 p.m. UTC. All three reports are likely to have at least some impact on the price of BTC, but the US report is likely to have the strongest effect. If the US PMI shows a pick up in economic activity and comes out above market's expectations, BTC may potentially drop—possibly below $63,000. Conversely, if PMIs reveal that business activity in the US is slowing, the bullish trend in BTC/USD is likely to continue.

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