KVB Market Analysis | 29 August: Gold Price Recovers as Market Eyes US Rate Cuts and Geopolitical Tensions

Product: XAU/USD

Prediction: Increase

Fundamental Analysis:

The Gold price (XAU/USD) recovered some lost ground on Thursday after bouncing off the weekly lows in the sub-$2,500 region per ounce troy. The expectation of US interest rate cuts might lift the Gold demand as lower interest rates reduce the opportunity cost of holding non-yielding gold. Additionally, the current political uncertainty in the US, geopolitical tensions in the Middle East and global economic concerns contribute to the precious metals upside.

Technical Analysis:

The Gold price trades in positive territory on the day. The precious metal remains stuck under a five-month-old ascending channel upper boundary and the all-time high. However, the overall picture is bullish, with the price well above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The upward momentum is confirmed by the 14-day Relative Strength Index (RSI) positions above the midline near 61.00, indicating that there is potential room for further upside.

Product: EUR/USD

Prediction: Increase

Fundamental Analysis:

EUR/USD trimmed recent gains on Wednesday, stepping lower after clipping fresh highs for the year as broad-market anticipation of Federal Reserve (Fed) rate cuts in September keeps broad-market risk appetite pinned to the ceiling.

There is little of note on the economic calendar for the middle range of the trading week, but Thursday will bring an update on US Gross Domestic Product (GDP) figures, which will be closely watched. However, little movement is expected as markets have broadly priced in Q2 annualised GDP growth to hold steady near 2.8%.

Technical Analysis:

EUR/USD is on pace for its best single-month performance since November of 2022, up over 3.1% just in the month of August. Despite this weeks early technical exhaustion pullback, Fiber has gained ground for four consecutive trading weeks, and is bidding well above the 200-day Exponential Moving Average (EMA) at 1.0832. Despite a healthy bid deep into bull country, Fiber is running a deep exposure to a bearish pullback, and a lack of topside momentum could see price action tumble all the way back to the 50-day EMA at 1.0925.

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis:

The USD/JPY pair remains on the defensive around 144.50 during the Asian trading hours on Thursday. The dovish remarks from the Federal Reserve (Fed) officials continue to undermine the US Dollar (USD) in the near term. Investors await the preliminary US Gross Domestic Product(GDP) growth number for Q2, which is expected to grow 2.8%.

The Bank of Japan (BoJ) Deputy Governor Ryozo Himino stated on Wednesday that the Japanese central bank would continue to raise interest rates if inflation stayed on course, while also closely monitoring financial market conditions。

Technical Analysis:

The pair has attempted a pullback after the massive downtrend, which culminated after a softer US CPI print encouraged Japanese officials to intervene in the FX market to strengthen the yen. USD/JPY now trades lower while markets attempt to assess the next move. If the Fed adopts a bearish outlook while the BoJ continues to move forward with one more rate hike in December, it is possible there will be further weakness heading into the end of the year. Support lies at the spike low of 141.70, followed by 140.25 – a prior swing low from December last year. Resistance lies at the recent swing high of 149.40.

Product: WTI

Prediction: Decrease

Fundamental Analysis:

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $75.15 on Thursday. The WTI price edges lower as investors are concerned about slower economic growth in China. However, oil supply risks in the Middle East and Libya might help limit the WTIs losses.

Technical Analysis:

Crude oil price found solid support at 75.00$ level, to rebound bullishly and head towards potential test to the key resistance 76.86$, noting that these levels represent the next trend keys, and the price needs to surpass one of them to detect the next destination clearly, which urges caution from the upcoming trading according to these levels to detect the next targets.

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