Wed, Oct 05, 2022 @ 15:12 GMT
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Gold Two Factor Story | Aussie GDP Expanded| US Data And Sterling At 1.30 Under Focus

Two Factors Supporting Gold
ISM Non- Manufacturing and Fed Speeches Matter
Sterling At 1.30, For How Long?
Aussie GDP q/q Expanded​

Two Factors Supporting Gold

North Korea may have another missile test any day (as there have been a few reports that the country is preparing for such event). More recently, we had more measured approach from Washington especially from president Trump who has adopted a more sensible approach rather than taking it to Twitter. I suppose ‘fire and fury’ tweet must have shown him that sensitive matter like these needs to be done through U.N

Gold price has retraced from it’s high of 1344.44 due to the fact that the US hasn’t made any rationale decision. It would be wrong to say that gold price in the recent months have moved higher mainly due to Trump. There are two important ingredients which has cooked the price of gold to this. Firstly, North Korea has reacted more notoriously due to Trump. This factor isn’t going to stop anytime soon because of the unpredictable nature of both leaders; Kim Jong and Donald Trump. Finally, the global economic recovery has also supported the demand for the gold price. India and China have both increased their buying of physical metal.

In other words, we do not see the price of gold melting, there are way too many factors which are going to provide the support for the bulls. We maintain our year end target at 1350.

ISM Non- Manufacturing and Fed Speeches Matter

For the dollar index, the focus is more about the slated speeches by different Fed members. Their contrasting views and outlook for the economy makes the foundation for the dollar index. The Fed governor, Lael Brainard warned that the Fed needs to be cautious about their tightening monetary policy. The FOMC member Dudley will be speaking tomorrow and his contrasting views could push the dollar in a different direction. The upcoming US ISM non manufacturing PMI number matters for now. The forecast is for a more optimistic reading (55.8) relative to the previous reading (53.9). The dollar has been haunted by Friday’s weaker payroll number and this data has a potential for a turnaround. Geopolitics and natural disasters, both are going to have a meaningful influence on the US GDP numbers and simmering warnings from rating agencies like Standard & Poor aren’t aiding the dollar index.

Sterling At 1.30, For How Long?

The sterling dollar pair still enjoying the 1.30 mark against the dollar despite weaker than expected PMI which confirmed that Brexit uncertainty has made the sector to grow at the slowest pace since September.

Aussie GDP q/q Expanded

The Australian economy expanded much faster (0.8%) than the previous reading (0.3%). However, the number matched the expectations and traders have not rewarded the Aussie for that. In other words, the tail wind for the Aussie-dollar pair was not strong enough to keep the price in green territory. Government spending is aiding the growth however the RBA feels comfortable with current stance and it is no rush in changing anything yet. No change in the bank’s stance is not overwhelming news for traders.

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