Gold extends week-start rebound despite market’s inaction

Global markets remain dicey even as cautious optimism prevailed amid initial reaction to the Fed Chair Jerome Powell’s hesitance to cheer upbeat US NFP. Adding strength to the mildly positive sentiment could be US President Joe Biden’s SOTU which painted a rosy picture of the world’s largest economy. 

Furthermore, hopes of upbeat China growth offered an extra hand to the risk-takers amid a sluggish Wednesday. Even so, fears emanating from China and the overall hawkish tone of the US central bank policymakers seem to challenge the sentiment.

It should be observed that the US Treasury bond yields retreated after a three-day uptrend and dragged the US Dollar with them. The same joins cautious optimism in the market to help Gold buyers but Brent Oil eases from the weekly top.

AUDUSD portrays a risk-on mood while NZDUSD fails to cheer New Zealand PM Hipkins’ upbeat comments. Additionally, USDJPY ignores softer yields to grind higher past 131.00 but USDCHF has fewer initiatives to overcome the boring trading session.

Cryptocurrencies struggle to extend the previous day’s recovery moves amid fears of hard regulations from the US, UK and major Asian authorities.

Following are the latest moves of the key assets:

• Brent oil struggles to extend two-day uptrend near $84.00.
• Gold rises for the third consecutive day, up 0.75% near $1,885 by the press time.
• USD Index drops for the second consecutive day to near 103.10 as we write.
• Wall Street closed with gains but the equities in the Asia-Pacific region traded mixed while those in Europe and the UK print mild gains.
• BTCUSD seesaws above $23,000 but ETHUSD prints mild gains around $1,680.

An inactive day overall

Despite the presence of Fed Chair Powell’s speech and US President Joe Biden’s SOTU, the markets remained lackluster as both events failed to offer any clear directions. Adding strength to the inaction were mixed concerns about China as fears of Sino-American tussles contrast with the growth expectations.

It should be noted that Bank of Canada Governor Tiff Macklem couldn’t impress Loonie traders despite teasing a pause in the rate hike trajectory. The quote also failed to retreat in crude oil price, Canada’s main export item.

Elsewhere, Gold cheers cautious optimism and softer yields to rise for the third consecutive day even as Brent oil price remains sluggish after a two-day rebound from the monthly low.

On a broader front, US Dollar weakness joined mildly offered stock futures, despite the firmer closing of Wall Street, to confuse traders. This joined the looming fears of harsh crypto regulations from developed countries and Asian majors to probe BTCUSD and ETHUSD bulls of late.

• Strong buy: USDJPY
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Qualitative factors are the key

Given the lack of major data/events, comments from second-tier central bank authorities and risk catalysts surrounding China, as well as recession woes, could entertain market players moving forward. Amid these plays, the riskier assets may consolidate recent losses, and can even gain further, but further US Dollar weakness appears doubtful.

May the trading luck be with you!