Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious Outperformance
Find Stocks Now

Gold Drops Slightly; USDJPY Stabilises Ahead of Japanese CPI Report

Published 11/23/2023, 03:53 AM
Updated 02/20/2024, 03:00 AM

Gold Corrects Slightly But Remains in the Uptrend

The gold (XAU) price dropped by 0.43% on Wednesday after higher-than-expected Michigan Consumer Sentiment Index figures.

A technical rise of the US Dollar Index (DXY) and the proximity of a 2,000 resistance level prompted some traders to close their long positions in XAU/USD. However, expectations that the U.S. Federal Reserve (Fed) won't be raising interest rates soon limited XAU/USD drop. Moreover, the market is currently pricing in a 57% chance of a rate cut in May 2024. 'The increase in the market expectations for the Fed cutting cycle to commence earlier in 2024 has been the prime force driving gold prices higher over the last week,' said Daniel Ghali, a commodity strategist at TD Securities.

XAU/USD was rising during the Asian and early European trading sessions. The U.S. market will be closed today and early on Friday due to Thanksgiving. Thus, volatility will be subsided, but the lack of liquidity may result in sharp moves of the instruments in case of unexpected events or data.

"Spot gold may revisit its 21 November high of $2,007.29 per ounce, as it may have completed a correction from this level," said Reuters analyst Wang Tao.

USD/JPY Stabilizes Near 149.00 Ahead of the Japanese CPI Report

The Japanese yen (JPY) lost 0.76% on Wednesday as the US Dollar Index (DXY) corrected upwards following a better-than-expected Consumer Sentiment report and a smaller-than-expected increase in Jobless Claims numbers.

USD/JPY has been rising since 21 November after the FOMC minutes revealed the Federal Reserve (Fed) monetary policy would remain 'cautiously restrictive.' Conversely, the Bank of Japan's (BOJ) monetary policy is extremely loose, which is the main reason USD/JPY has been in a major uptrend for the past three years. Still, the market speculates that BOJ may be preparing for a tightening campaign. 'If next year's annual wage negotiations heighten prospects of inflation sustainably hitting its 2% target, the bank may end its negative interest rate policy in April,' the central bank's former Executive Director Kazuo Momma said. Increasing interest rate expectations will support the Japanese yen, which has been under pressure lately after a truce between Israel and Hamas capped gains potential due to USD/JPY's status as a safe-haven asset.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

USD/JPY fell during the early European trading session. Trading activity will be minimal today across foreign exchange markets due to the Thanksgiving holiday. However, the Japanese inflation data release today at 11:30 p.m. UTC will be vital for short-term directional guidance for currency pairs. The data could also influence current projections for rate hikes, which are anticipated to begin in late 2024. If the inflation data comes out stronger than expected, USD/JPY may drop below 147.00. However, lower-than-expected figures may push the pair towards 150.00 again.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.