Metals unaffected by geopolitics

Metals Unaffected by Geopolitics – Despite escalation in the Middle East over the past few days, it seems that metals are not affected much. Gold failed to reach a new record high and declined back towards $2645 earlier today, while Silver remained under $32. On the other hand, US equities closed yesterday’s trading slightly higher. The focus now is on the US Jobs Report on Friday.

US data ahead

During the US session today, all eyes will be on another round of key economic releases from the US.

We will be focusing on the Jobless Claims, which have eased back over the past few weeks and are not as elevated as they were about a month ago. Moreover, the Services PMI might be more important; estimates point to a slight increase towards 51.7. However, we will be focusing more on the Employment component and whether it will continue to expand or not.

DXY upside retracement continues

The US Dollar Index is continuing its upward retracement after staying above the solid support at 100.65. This has led to another bounce towards the resistance area at 101.80, which should be carefully monitored. A break above 102.0 would pave the way for further gains, possibly towards 102.50 for now.

The technical indicators currently show a bullish trend and are not indicating overbought conditions, which means there is potential for further gains. However, this upward movement is likely just a short-term retracement within an overall bearish long-term outlook. Traders should not interpret this retracement as a shift in the major bearish trend.

GBP under pressure 

The British Pound has sharply declined since the beginning of the day, dropping by more than 1% following remarks from the BOE chair hinting at an aggressive approach to cutting rates. Currently, the pair is trading at the 1.3130 support area. A break of this support level would pave the way for further declines towards 1.30 in the coming days.

The technical indicators are showing a clearly bearish outlook, suggesting that any upward retracement is likely to be limited below the previous high of 1.3430 for now. It’s important to note that the technical indicators are also far from being oversold. Additionally, attention will be on the budget announcement scheduled for the end of this month.

EURUSD holding above 1.10

EURUSD failed to break above 1.12 multiple times, leading to a short-term move back towards 1.10 – 1.1040. This level has remained solid since mid-August, causing the technical indicators to be more bearish than bullish after four days of consecutive declines.

Just to recap, as long as the index continues to trade above 1.10 – 1.0980 on the weekly chart, the bullish outlook remains intact. However, a weekly close below that level would indicate a significant shift in the current trend, potentially leading to a further decline towards 1.09 for now. On the upside, the first immediate resistance is at 1.1090 – 1.1100.

Gold selling may continue

Gold prices have attempted to reach a new record high several times but have been unsuccessful despite the recent tensions in the Middle East. The technical indicators on the daily chart now show a more bearish outlook, particularly as Gold has been heavily overbought over the past month.

At present, the time/price method suggests that Gold is likely to continue gradually decreasing towards 2635 initially. If it breaks below this support, further declines could occur, possibly towards $2600 over the next few weeks. This bearish outlook remains valid as long as Gold does not surpass 2685.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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