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Gold rally on hold as Dollar bounces back
Gold's rally has stalled as markets await key data and speeches from Jackson Hole
West Texas Intermediate has seen a five-day decline
EUR/USD has slipped, influenced by weaker-than-expected German PMI data
Germany's manufacturing sector contracted more than anticipated
Traders and investors are closely watching upcoming comments from Federal Reserve Chair Jerome Powell at the Jackson Hole symposium, which are expected to provide further insights into the central bank's future policy direction.
Commodities
Gold's recent upward movement has hit a temporary pause as the market anticipates crucial data releases and speeches from the Jackson Hole central banker symposium. Weak economic indicators from the US point towards potential rate cuts, providing underlying support for gold prices.
US Treasury yields have rebounded, and the US Dollar (USD), which typically moves inversely with Gold, has recovered into positive territory after hitting year-to-date lows earlier in the week.
Oil Market
West Texas Intermediate (WTI), the benchmark for US crude oil, has been trading lower for five consecutive days as of early Wednesday’s Asian session. The easing of concerns over a broader Middle Eastern conflict has contributed to the decline. However, rising expectations for a potential Federal Reserve rate cut might cushion further losses. According to the EIA, crude oil inventories dropped by 4.65 million barrels, reaching 426.03 million last week. Today WTI is trading around $71.70, with prices edging lower due to receding fears of an extended Middle Eastern conflict.
Currencies
The US Dollar is expected to trade within a range, EUR/USD has eased to 1.1130 during Thursday’s European session, retreating from a fresh year-to-date high of 1.1175 posted on Wednesday. The slight drop in the major currency pair can be attributed to weaker-than-expected German flash HCOB Composite PMI for August and softer Q2 Eurozone Negotiated Wage Rates, which weighed on the Euro.
The German PMI report revealed a sharper-than-anticipated contraction in the manufacturing sector, with the index falling to 42.1. In contrast, the service sector showed slower-than-expected growth, with the index rising to 51.4. On the other hand, the Eurozone Composite PMI unexpectedly increased to 51.2, surpassing economists’ forecasts. The robust expansion in the service sector, with the Service PMI climbing to 53.3, was a key driver, even as the Manufacturing PMI continued its decline, slipping to 45.6.
