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Fed Reduce Bond Purchases To Stimulate Gold To Fall 1%

1. Forex Market Insight  


The initial value of the U.S. IHS Markit Services PMI fell to 54.4 in September. Although it has been above the boom-and-bust mark for the 14th consecutive month, it was at a new low since July 2020. The final value in August was 55.1, the same period in 2020 was 54.6.

The initial value of the employment sub-index fell to 49.9, the lowest since June 2020 while the new business sub-index also hit a new low since July 2020. This has led to the euro’s rally yesterday.

Technical Analysis: 

(EUR/USD 1-hour chart) 

Execution Insight: 

Today, pay attention to the 1.1753-line. The euro is still running below the 1.1753-line, but the trend is still bearish. Below, pay attention to the support of the 1.1727 and 1.1705 positions. Once the strength of the euro breaks through the 1.1753-line, it will open up further room for rebound. At that time, focus on the suppression of the 1.1786 and 1.1820 positions.

GBP Intraday Trend Analysis 

Fundamental Analysis: 

The Bank of England expects GDP growth in the third quarter to be 2.5% lower than the pre-epidemic level. The GDP growth is expected to be 2.1% in the third quarter, compared with the previous estimate of 2.9%. The downward revision to the GDP growth in the third quarter reflects the impact of supply constraints. In this regard, inflation is partly driven by base effects. Hence, any initial tightening measures should be implemented through the bank rate.

In spite of everything, current energy developments pose an upside risk to the April forecast. Thus, UK inflation is expected to remain above 4% by the second quarter of 2022.

Technical Analysis: 

(GBP/USD 1-hour chart) 

Execution Insight: 

The pound’s attention remains on the 1.3669 line today. It is operating above the 1.3669 line, while maintaining the bullish trend. Once the pound falls below the 1.3669-line again, then it will pay attention to the 1.3574 line of support.

2. Precious Metals Market Insight


Fundamental Analysis: 

Gold prices fell by 1% yesterday, due to the rising U.S. bond yields and investors’ preference for riskier assets as investors continue to prepare for an earlier-than-expected Federal Reserve rate hike. With this, global stock market gains also put pressure on safe-haven assets.

The Federal Reserve said Wednesday that it may begin tapering its bond purchases as early as November and hinted that a rate hike after the end of bond purchases could come sooner than expected. That being said, a Fed rate hike would increase the opportunity cost of holding gold, which does not hold interest.

Technical Analysis: 

(Gold 1-hour chart) 

Trading Strategies: 

Today, gold pays attention to the 1741-line. The upper part pays attention to the suppression of the 1755 and 1768 positions, while the lower part pays attention to the 1724-line of support. 

3. Commodities Market Insight 

WTI Crude Oil 

Fundamental Analysis: 

Yesterday, Brent oil rose by $1.06, or 1.4%, to settle at $77.25/barrel, a new high since October 2018. Meanwhile, the U.S. oil rose by $1.07, or 1.48%, to settle at $73.3/barrel.

The upside in oil prices was supported by lower U.S. crude inventories as production in the Gulf of Mexico remained disrupted after two hurricanes, while fuel demand grew.

Technical Analysis: 

(Crude oil 1-hour chart) 

Trading Strategies: 

Today, the oil prices pay attention to the 72.30 line of support. As long as the oil price runs above the 72.30-line, it will maintain the bullish trend. At that time, pay attention to the suppression of the 73.90 and 75.04 positions. If the oil price falls below the 72.30-line, it could possibly open up a further downside potential. At that time, pay attention to the support at 71.33 and 69.75.

While every effort has been made to ensure the accuracy of the information in this document, DOO Prime does not warrant or guarantee the accuracy, completeness or reliability of this information. DOO Prime does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, securities, futures, options, bonds or any other relevant financial instruments or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of financial instruments, any related products or any other products, securities or investments. Trading involves risk and you are advised to exercise caution in relation to the report. Before making any investment decision, prospective investors should seek advice from their own financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision. 

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