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Gold Falls as Markets Price in Further US Rate Hikes

Mahmoud Alkudsi Mahmoud Alkudsi 15/09/2022
Gold Falls as Markets Price in Further US Rate Hikes  Gold Falls as Markets Price in Further US Rate Hikes
Gold Falls as Markets Price in Further US Rate Hikes Mahmoud Alkudsi
Economic data releases
 
The New Zealand GDP (Q2) of 0.4% released earlier have come in higher than expected of 0.2% yet lower than the prior read of 1% while the Australian unemployment print (Aug) of 3.5% has come in higher than the previous and expected of 3.4%.
 
Looking ahead
 
The market awaits the US Retail Sales (Aug) and the US Industrial Production (Aug) today at 4:30 pm UAE time.
It is worth noting that, the Bank of England had been due to meet today to announce the interest rate decision however, the meeting was delayed to September 22nd due to royal mourning.
 
 Indices and Bonds Yield
 
US equity futures steadied after their recent sharp decline sparked by a higher-than-expected inflation print. Investors await the retail sales data release although it is unlikely to have a big effect on the expected 75bp rate hike in the upcoming Fed meeting. The central bank will release on Wednesday growth and inflation forecasts with the dot plot to provide more clarity about the US monetary policy in 2022 and 2023.
 
The market resumed its bonds selloff causing the 10-year bond yield to rally to a multi-month high. The Fed will keep an eye on the 2–10-year yield spread has widened to a negative 40bp highlighting the market’s belief that the economic recession could stay for longer.  
 
Major FX Currencies

The US dollar price firmed against major currencies on expectations of a more contractionary monetary policy. therefore, market participants started to price in and position for higher US interest rates up to 4.25% by the end of 2022.
Technically the US Dollar index could be trading towards 110.09. A daily close above this level may encourage traders to rally the price towards 112.02. On the other hand, any failure in overtaking 110.09 opens the door for the price to revisit 108.11
 
The euro fell below the parity level with the US Dollar while investors weighed if the European plan to contain the energy crisis would be enough to address high fuel costs. The EU plan includes helping consumers with a140 billion Euros raised from energy companies’ earnings.
Technically, the EUR/USD closed below 1.0000 indicating that the price may trade towards 0.9858 and 0.9780, respectively. However, a daily close above 1.0000 could encourage traders to push towards 1.0146 and 1.0334.
 
 
Commodities
 
The Gold price started to retreat on Tuesday as the US inflation report surprised markets and revealed that price pressures are not slowing down and that the Fed may need to hike rates further.
Technically, a daily close below 1685 may embolden traders to press towards 1661 and 1645 respectively while a daily close above 1705 could send the price to retest $1720/oz.
 
The Oil price steadied on selling pressures from declining demand from China and buying pressures as the US thinks to refill its strategic reserves tanks used to curb the recent rise in oil prices following the Russian invasion of Ukraine. The US administration may take this step once the oil price hit $80pb.
Technically, a daily close of WTI oil above 90.50 could trigger a rally towards 98.65, while a daily close below 85.14 may encourage traders to press towards 79.82.
 
Natural Gas - Daily Price Chart


Chart Source: ThinkTrader
In August 29, natural gas prices corrected lower and started to trade in a sideways move creating lower highs with higher lows. The price developed a head and shoulders pattern therefore, a break below the neckline located at 7.83 may send the price even lower towards 6.08.
Currently, the natural gas moves in the trading zone 9.40 – 8.25 therefore, a daily close above the high end of the zone could send the price towards 10.09 while a daily close below the low end of the zone opens the door to traders to press towards 7.01. That said, the support level located at 7.50 should be kept in focus.
 

 
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Lesego
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Lesego Mthombothi
Market Research Analyst, South Africa

Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
 
 
 

Mahmoud Alkudsi
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Mahmoud Alkudsi
Chief Markets Analyst, MENA

Mahmoud is a market analyst, with over a decade of experience in financial markets. He follows main market movers and tracks their effect on the price chart. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and with his wide experience in providing educational and guidance materials to all levels of traders, he helps them in making informed trading decisions. Before joining ThinkMarkets, Mahmoud was head of market research departments in different reputed financial companies, where he provided market analysis for a variety of asset classes, including FX, equities, indices, and commodity futures. As an experienced market commentator, he was hosted by too many print and broadcast media, including not limited to Sky News Arabia, France 24, Alarabyia, Alsharq-Bloomberg, and CNBC Alarabyia to discuss key risk events their clear impact on the price action. Mahmoud holds a Master of Business Administration (MBA) from Cardiff Metropolitan University of Wales, UK, and speaks Arabic, English, and Spanish.

Shawn
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Shawn Lee
Market Analyst, Malaysia

Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.

Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Lesego
Lesego Mthombothi
Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
Mahmoud Alkudsi
Mahmoud Alkudsi
Mahmoud is a market analyst with over a decade of experience in financial markets. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and has experience in providing guidance to all levels of traders.
Shawn
Shawn Lee
Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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