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Market Analysis: Gold Surges, US Dollar Declines, GBP/USD and EUR/USD Make Gains

by Jennifer

In the latest market developments, the US dollar is on a downward trajectory as traders anticipate an aggressive series of rate cuts in the upcoming year. The decline in US Treasury yields is leaving the US dollar vulnerable against various currencies. Disappointing figures from Thursday’s US GDP report, along with subpar core PCE readings on Friday, contributed to the weakening of the US dollar.

US Economy Update: Q3 GDP Revised Downward, Impact on Dollar Index; Gold Sees Upward Trend

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The revision of US Q3 GDP figures has led to a decline in the Dollar Index. Simultaneously, gold experienced an upward surge, reaching $2,070/oz. on Friday. The diminished strength of the US dollar, coupled with reduced US Treasury yields, is enhancing gold’s appeal. Investors are eyeing a potential retest of the December 4th spike high at $2,147/oz. early in 2024.

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Retail trader data indicates that 59.65% of traders are net-long, with a long-to-short ratio of 1.48 to 1. The number of net-long traders has decreased by 6.22% compared to yesterday but increased by 1.59% from last week. Meanwhile, net-short traders rose by 2.46% from yesterday and 5.68% from last week.

Outlook for US Equities and Global Markets

US equity markets are capitalizing on the risk-on sentiment, concluding Friday slightly below recent multi-year highs. Positive sentiment prevails in the equity space, and a renewed push higher across various indices is anticipated as trading resumes in early January.

British Pound Outlook: GBP/USD Strengthens Despite Calls for Rate Cuts

Amid a global race towards lower government bond yields, central bankers are signaling a series of interest rate cuts in 2024. Despite these expectations, GBP/USD is exhibiting strength.

Euro Forecast: Slow Week for EUR/USD, EUR/JPY Amid Data Absence and Thin Liquidity

Having breached the psychological level of 1.1000 before the weekend, EUR/USD anticipates subdued movements until the New Year.

Gold Forecast: XAU/USD Driven by Softer US Inflation Outlook

Gold prices continue their upward momentum in the final trading week of 2023. Limited volatility is expected, with XAU/USD aiming to maintain levels above $2050.

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