Gold faces ongoing pressure amid strong U.S Dollar

Precious metal hovers near three-week low around $2,605 as market weighs Fed rate cut expectations and potential Middle East ceasefire

By Farah Mourad | 9 October 2024

Market open
  • The NZD has become the weakest currency in the market today

  • Germany’s trade surplus increased to €22.5 billion in August 2024

  • Silver has continued to decline for the third straight day

The New Zealand dollar

The currency become the weakest performer in the currency market today, depreciating by approximately 0.6-0.8%. This comes on the heels of the Reserve Bank of New Zealand's (RBNZ) decision to reduce the interest rate by 50 basis points. Although the RBNZ maintained that its monetary policy remains restrictive, the move has led to heightened expectations of more aggressive rate cuts in the future, triggering a significant sell-off in the NZD. The new cash rate of 4.75% aligns with market forecasts and economist predictions.

German Economy

In Germany, the latest trade data for August 2024 reveals a notable improvement. The country's trade surplus widened to €22.5 billion, surpassing expectations of €18.9 billion, driven by a 1.3% month-on-month increase in exports, reaching €131.9 billion, while imports dropped by 3.4% to €109.4 billion. Compared to the same month in 2023, exports saw a marginal 0.1% rise, and imports fell by 3.1%. Exports to the U.S. surged by 5.5% to €13.5 billion, while exports to China increased by 1.9% to €7.4 billion, with Chinese imports declining by 1.4% to €13.2 billion.

Commodities

WTI crude oil prices are encountering selling pressure, dipping near $73.35 during early Asian trading hours. Factors such as ongoing concerns about China's demand outlook are weighing on prices. However, heightened geopolitical risks in the Middle East may limit further declines.

Silver has been struggling to maintain momentum, continuing its downtrend for the third consecutive day. After rebounding slightly from the psychological $30.00 mark, silver remains vulnerable as it trades just above the mid-$30.00 range, extending its correction from last week’s peak, which was the highest level seen since December 2012.

Gold prices remain under consistent selling pressure for the sixth consecutive day on Wednesday, hovering just above a three-week low around the $2,605-$2,604 range, which was reached the previous day. The strength of the U.S. Dollar (USD), currently near a seven-week high, is a major factor weighing on gold as market participants scale back expectations for a significant interest rate cut by the Federal Reserve. Additionally, reports of a potential ceasefire have further contributed to the bearish sentiment surrounding the precious metal.