Gold refreshes five-month high on softer USD, market’s optimism

Multiple headlines suggesting the re-opening of covid-led activity restrictions in China allowed markets to begin the trading week on a firmer footing. Also supporting the risk-on mood are the hopes of easy rate hikes from the Fed as the policymakers reach the pre-FOMC blackout.

As a result, the US Dollar Index dropped to a fresh low since late June and allowed commodities and Antipodeans to extend the previous week’s gains. Equities were mixed as Friday’s strong US NFP contrasted with a rally in China-linked shares.

Gold rose to the highest levels since early July whereas crude oil dropped amid contrasting news from OPEC+ and Russia.

AUDUSD remains firmer as traders await this week’s RBA whereas USDJPY bucked the trend on firmer Treasury yields.

Cryptocurrencies were on the front line and stretched the previous gains despite the market’s fears of harsh regulations and more bankruptcies.

Following are the latest moves of the key assets:

• Brent oil remains pressured below $87.00, fading the previous week’s rebound from yearly low.
• Gold rises to multi-day high near $1,810 following a two-week uptrend.
• USD Index licks its wounds near the lowest levels since late June.
• Wall Street closed mixed and so do equities in the UK and Europe.
• BTCUSD prints mild gains near $17,300 whereas ETHUSD rises around 1.30% to $1,300.

Risk-on mood prevails…

Although the US jobs report surprised markets on Friday and underpinned the US Dollar, the greenback’s uptick couldn’t last long as traders fear slower rate hikes from the Fed and refrained from backing the US currency.

Positive sentiment surrounding China’s re-opening, backed by President Xi Jinping’s comments, also weighed on the USD. Given the dragon nation’s dominance in the gold market, the upbeat news and softer US dollar allowed the yellow metal to refresh the multi-day high.

Furthermore, expectations of RBA’s rate lifts, despite trying to tame the bears with optimistic headlines, allowed AUDUSD to remain on the front foot, along with the US dollar’s weakness and risk-on mood.

Crude oil prices failed to cheer the US dollar’s weakness to a much extent as the OPEC+ left output decision intact. The black gold couldn’t cheer Russia’s rejection to supply oil to the countries backing the EU-led price cap.

Elsewhere, news of more layoffs and bankruptcies in the crypto-linked exchanges couldn’t drown the BTCUSD and ETHUSD amid technical breakouts.

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

PMIs, US Factory Orders are in focus

Looking forward, final readings of November’s PMIs from the UK, Eurozone and the US will join the US ISM Services PMI to entertain the intraday traders. Additionally important will be the US Factory Orders for October and ISM Services PMI for November. It’s worth noting, however, that an absence of the Fed speakers may allow the markets to remain lackluster while RBA and the first readings of the Michigan Consumer Sentiment Index will be important for the week.

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