Analysis on Gold: Monday, July 05th 2024
“Continued Demand for Safe-Haven Assets”
Gold made a historic leap on Friday, reaching an unprecedented high of around $ 2,477 per ounce. This monumental increase was a direct response to a disappointing U.S. jobs report, which heightened the probability of the Federal Reserve implementing more supportive economic policies.
In a surprising turn of events, the U.S. economy added only 114,000 jobs in July, significantly below the anticipated 175,000. The unexpected rise in the unemployment rate and the slower-than-expected wage growth point to a potential slowdown in the labor market, sparking concerns about the Federal Reserve's ability to navigate an economic downturn.
On Monday, the ISM Services PMI report, a key indicator of the service sector's health, is expected to show a slight improvement, rising to 50.9 from 48.8. However, earnings reports from major corporations have revealed their limited resilience to high interest rates.
With the market now bracing for a potential 0.5% interest rate cut by the Federal Reserve in September, the anticipation has led to a cautious start for U.S. stock futures on Sunday night. The Dow Jones Industrial Average futures saw a drop of 221 points, or 0.6%, while S&P 500 futures and Nasdaq-100 futures dipped by 0.9% and 1.2%, respectively.
Market volatility has increased, with the VIX index reaching a three-month high, presenting many trading opportunities. The United States Stock Market Index (USVIX) traded at 23.39 on Saturday, August 3rd. Over the last four weeks, USVIX lost 11.13%, but August 03rdce has risen by 6.29% over the past year. It is forecasted to be priced at 16.25 by the end of this quarter and 15.63 in one year.
Meanwhile, escalating tensions in the Middle East continue to drive demand for safe-haven assets like gold. Safe-haven assets are investments expected to retain or increase value during market turbulence. Investors often seek out these assets to protect their wealth as geopolitical tensions rise.
In summary, weak U.S. job growth, expectations of interest rate cuts, and ongoing geopolitical tensions, such as the situation in the Middle East, all contribute to the sustained demand for safe-haven assets such as gold.
Technical Analysis
XAUUSD 4 Hour-Timeframe
In order to execute the trade, traders should search for a buying opportunity. The stop loss should be set at least below the current candlestick, which is around $2,433 according to the trader's risk management strategies. The expected take profit point could be around $2,490, which is the next key resistance.
Gold made a historic leap on Friday, reaching an unprecedented high of around $ 2,477 per ounce. This monumental increase was a direct response to a disappointing U.S. jobs report, which heightened the probability of the Federal Reserve implementing more supportive economic policies.
In a surprising turn of events, the U.S. economy added only 114,000 jobs in July, significantly below the anticipated 175,000. The unexpected rise in the unemployment rate and the slower-than-expected wage growth point to a potential slowdown in the labor market, sparking concerns about the Federal Reserve's ability to navigate an economic downturn.
On Monday, the ISM Services PMI report, a key indicator of the service sector's health, is expected to show a slight improvement, rising to 50.9 from 48.8. However, earnings reports from major corporations have revealed their limited resilience to high interest rates.
With the market now bracing for a potential 0.5% interest rate cut by the Federal Reserve in September, the anticipation has led to a cautious start for U.S. stock futures on Sunday night. The Dow Jones Industrial Average futures saw a drop of 221 points, or 0.6%, while S&P 500 futures and Nasdaq-100 futures dipped by 0.9% and 1.2%, respectively.
Market volatility has increased, with the VIX index reaching a three-month high, presenting many trading opportunities. The United States Stock Market Index (USVIX) traded at 23.39 on Saturday, August 3rd. Over the last four weeks, USVIX lost 11.13%, but August 03rdce has risen by 6.29% over the past year. It is forecasted to be priced at 16.25 by the end of this quarter and 15.63 in one year.
Meanwhile, escalating tensions in the Middle East continue to drive demand for safe-haven assets like gold. Safe-haven assets are investments expected to retain or increase value during market turbulence. Investors often seek out these assets to protect their wealth as geopolitical tensions rise.
In summary, weak U.S. job growth, expectations of interest rate cuts, and ongoing geopolitical tensions, such as the situation in the Middle East, all contribute to the sustained demand for safe-haven assets such as gold.
Technical Analysis
XAUUSD 4 Hour-Timeframe
In order to execute the trade, traders should search for a buying opportunity. The stop loss should be set at least below the current candlestick, which is around $2,433 according to the trader's risk management strategies. The expected take profit point could be around $2,490, which is the next key resistance.
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