KVB Market Analysis | 24 Sept: Gold Hits Record High Amid Fed Rate Cuts and Geopolitical Tensions

Product: XAU/USD

Prediction: Increase

Fundamental Analysis:

Gold prices reached a record high on Monday due to rising expectations that the Federal Reserve will cut interest rates significantly again, along with increasing tensions in the Middle East. On Monday, spot gold closed up nearly 0.3% at $2,628.38 per ounce, hitting a peak of $2,634.88 per ounce during the day, which is a new all-time high. The market is still reacting to the Federal Reserves recent 50 basis point rate cut. The Fed has indicated that it is not overly worried about inflation and is focused on keeping unemployment low. If jobs drop significantly, the market may believe the Fed will cut rates more aggressively, which would be good for gold prices. Additionally, instability in the Middle East could further push gold prices higher.

Technical Analysis:

The outlook for gold is leaning upwards, but the recent rebound seems to be overextended. Gold prices remain confined within a $20 range. The Relative Strength Index (RSI) has turned overbought, suggesting buyers are still in control, but a pullback could happen. If gold breaks below the September 18th high of $2,600 per ounce, a decline is expected. The key support level to watch next is the September 18th low of $2,546 per ounce, followed by the 50-day Simple Moving Average (SMA) at $2,481 per ounce. On the other hand, if gold breaks the all-time high of $2,634 per ounce, traders might focus on the $2,650 area, and then the $2,700 level.

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis:

The report showed that the Composite PMI grew at a slower rate, dropping to 54.4 from 54.6 in August. A sharp drop in manufacturing activity was balanced by better-than-expected performance in the services sector. The Manufacturing PMI unexpectedly fell to 47.0, while it was predicted to rise to 48.5 from the previous reading of 47.9. The Services PMI, which measures activity in the services sector that makes up two-thirds of the U.S. economy, came in slightly higher at 55.4 compared to the estimate of 55.2 but was still lower than the previous figure of 55.7.

Technical Analysis:

The Bank of Japan kept interest rates unchanged at 0.25% last Friday. In the next few trading sessions, USD/JPY and EUR/JPY may test the 145-146 and 161.50-162 levels, respectively. After that, well need to watch closely to see if the price continues to rise. On Monday, the USD/JPY pair moved above 144.00 during the North American session, following the release of mixed preliminary U.S. S&P Global PMI data for September.

Product: BTC/USD

Prediction: Decrease

Fundamental Analysis: CoinTelegraph pointed out that the rejection near Bitcoin's $65,000 resistance level shows that sellers want to keep the price in the lower half of the $54,000 to $73,777 range, but buyers are not giving up easily. The latest 10x Research report indicates that Bitcoin is ready for a rebound, considering it is entering its historically strong season from October to March. Another positive factor for the crypto market could be the U.S. Federal Reserve's significant interest rate cut of 50 basis points on September 18. CoinShares' latest weekly digital asset fund flow report said this rate cut may have contributed to $321 million flowing into digital asset investment products last week.

Technical Analysis:

Bitcoin buyers are trying to push the price above the $65,000 resistance level, but sellers are still holding their ground. If buyers don't give up much space to sellers, the chances of a rally above $65,000 will increase. Bitcoin could then surge to $70,000, where strong resistance from sellers is expected. If the price drops below the 20-day moving average of $60,621, this positive outlook will be cancelled in the short term. Bitcoin could then fall to the 50-day moving average of $59,382, and later to $57,500.