Following the spike in gold prices, renewed selling pressure emerged as prices neared $3,385. This decrease undid half of the small progress achieved only 24 hours earlier. The industrially important precious metal hit its highest level in three weeks on Tuesday. Yet, its momentum was turned as it failed to gather steam amid a somewhat US Dollar strength backdrop.
Investors and traders alike began to notice a change in the market landscape. They’re re-evaluating their views ahead of Friday’s important US Non-Farm Payroll (NFP) data. Despite the thrill that this lead economic indicator has generated, market participants are treading cautiously. This gold performance has been traditionally tempered by overly cautious gold price performance.
Even with the recent drop, analysts are indicating that gold’s bullish momentum is still very much alive. This sentiment comes as the yellow metal’s price fluctuates, indicating that there may still be opportunities for recovery in the near term.
At the same time, the GBP/USD exchange rate recovered to close to 1.3550 in early European trading on Thursday. The US Dollar experienced a resurgence, fueled by new demand. This momentum was further amplified by the optimism surrounding trade deals between the US and Canada, and the US and the EU.
“GBP/USD reverses to near 1.3550 as US Dollar finds fresh demand” – FXStreet
The Japanese Yen had bo much momentum going for it. Increasing speculation for early Bank of Japan (BoJ) rate hikes weighed on it and capped upside. The USD/JPY pair maintained gains above the 143.00 threshold, reflecting the ongoing influence of a modest uptick in the US Dollar.
With traders still likely to be positioned ahead of some key U.S. economic releases, the market is in a cautious mood. The relationship between currencies and commodities paints a picture of a closely connected tie up between price shifts and wider marketplace parameters.
Along with gold and currency market movement, the market is watching with bated breath for news of progress on trade agreements. And optimism about possible trade deals is raising overall confidence in the Greenback. This is on the backdrop of increasing volatility in the currency in recent sessions.
“Gold price remains depressed amid modest USD strength; bullish potential seems intact” – FXStreet