US services sector picks up in January
The U.S. dollar strengthened to a three-month high, supported by positive economic indicators in the US.
Gold prices sharply decline, testing a crucial support level around $2015, as concerns about prolonged higher U.S. interest rates persist.
Long-term forecasts by major banks like UBS anticipate gold prices reaching $2,200 by year-end due to expected rate cuts and geopolitical risks.
On the Market Watch:
The US dollar reached its highest point in nearly three months against 9 other major currencies after the US ISM manufacturing rose to 53.4 vs 52.0 expected and 50.6 previous. US treasury yields also rose on the back of sustained higher interest rates supporting the greenback.
The growth of the U.S. services sector accelerated in January, driven by an increase in new orders and a rebound in employment, according to the Institute for Supply Management (ISM). Indicating better than expected economic growth in the US pushing back on early rate cuts from the Fed anytime soon.
In stock market news, Nvidia achieved a new all-time high in its closing stock price following Goldman Sachs' upward revision of its price target for the chipmaker. The new target, set at $800, up from $625, indicates a potential 16% increase from current levels with sentiment surrounding artificial intelligence remains robust in 2024.
Gold prices tumbled sharply overnight, the yellow metal has been testing a key support level near the $2015 region for the past four weeks.
Persistent concerns about prolonged higher U.S. interest rates continue to cast a shadow over the near-term outlook for gold, especially with markets starting to factor in the possibility that the Federal Reserve might maintain rates unchanged until June.
Although in the long-term big banks such as UBS expect gold prices to reach $2,200 by the end of the year on the back of rate cuts and geopolitical risks.