Gold

The stronger US dollar has acted as a handbrake on commodity prices, limiting what may have been otherwise a spectacular rebound to start 2024. Imagine what may happen if the dollar were to break down?

The US dollar snapped its 3-day winning streak and formed a bearish outside day, helping gold reach our upside target. EUR/USD and AUD/USD are now eyeing a move towards key resistance levels.

The greenback was higher again at the time of writing, which partly explains the earlier weakness in metals prices. Despite that, though, gold and silver recovered from their earlier weaknesses along with equity indices once US investors entered the fray.

GBP/USD could extend its losses despite the US dollar 'rebound' already losing steam, whilst gold's base looks set for a bullish breakout and USD/JPY might achieve another leg higher before it tops. In my opinion, at least.

Silver breaks bull flag resistance trend to signal potential trend resumption following the big rally in early last month.

Gold continues to consolidate below just record highs, paying scant attention to movements in other markets and geopolitical headlines since the start of May. As such, until we receive a definitive signal on direction, range trading is favoured near-term.

Both gold and GBP/JPY are showing signs of stability around key support levels to suggest they could extend their bounce. But with AUD/USD rising for four days on anticipation of a hawkish RBA, whether AUD/USD can extend its rally beyond resistance is up for question.

The BOJ's intervention prevented large speculators from reaching a record level of net-short exposure, asset managers continued to trim net-long exposure to the US dollar and US indices and also flipped to net-long the VIX.

The bigger the rally the harder the fall? Traders dabbling in the precious metals space may be asking that exact question with gold and silver extending their losses on Tuesday after a brutal start to the week.

There has been a shakeup at the top for gold, which opened the week at the high and closed the day at the low during its worst day in two years. We also look at a potential swing trade long on WTI crude oil.

EUR/USD futures traders are on the cusp of flipping to net-short exposure, and managed funds are increasing their short exposure to gold and crude oil.

The inverse relationship between bond yields and US dollar with the gold price has broken down in 2024, meaning technicals and inflation expectations are arguably a more important driver right now.

Gold outlook remains steady, for now, even as Iran has downplayed the impact of Israel strikes. The focus turns to sticky inflation and elevated interest rates narrative, as overbought gold hardly shows any signs of a bearish reversal yet.

WTI crude oil was up over 4% during the Asian session on reports that Israel’s middles had struck a site in Iran, further fans fears of a broader-scaled war in the middle East.

The US dollar index recouped some of Wednesday's losses and is now tapping 106, whilst the US 2-year yields considers a break above 5%.

A risk-off tone ensued across global markets to send the US dollar higher, to the detriment of AUD/USD and the ASX 200.

Gold investors face key dilemma as rising geopolitical risks could keep gold supported on dips, but even higher yields continue to increase the opportunity cost of holding gold. Gold technical analysis point to overbought conditions, so a bit of short-term weakness should not come as surprise.