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Market Update | 20/07/2023

Jul 20, 2023 | Marketupdates | 0 comments

Gold ended marginally lower but has rallied this morning with the pivotal $2000 in sight

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Today’s observations

Gold’s performance fluctuated from the $1979 mark in Asia on Wednesday, dipping slightly to $1972due to light profit-taking after its recent rally. Nevertheless, it made a recovery, reaching a morning London Benchmark of $1978.15. Such movement sindicate there was probable Central Bank buying. But this upward trend didn’t last long, as the precious metal dipped to a low of $1970 during early New Yorkt rades. The volume of trading was modest during this phase. Towards the close, gold made a comeback, ending with just a marginal loss of 0.1% at $1977. This morning it surged to a two-month high of $1987. This trajectory suggests that ‘the fast money’ traders have their eyes set on the pivotal two thousand dollar level as the weekend approaches. However, the release of several United States economic reports today might influence the market’s chatter about a possible pause by the Federal Reserve in their upcoming meeting next week. We anticipate today’s trading range to oscillate between $1975 and $1995. On the other hand, silver showcased a solid session, ending with an increase of 0.36% at $25.15.In contrast, platinum and palladium experienced a dip of 1.11% and 0.84%,settling at $989 and $1303 respectively.

Market Commentary

July 20, 2023(Reuters) – There’s been a slight uptick in gold prices this Thursday. The figures are inching closer to an eight-week high. This is driven by the speculation that the United States Federal Reserve may soon halt its interest rate hike. Spot gold rose by 0.1% to $1,978.59 per ounce by 0053 Greenwich Mean Time (GMT). The US gold futures remained relatively unchanged, sitting at$1,981.30. With the dollar index teetering near a more than one-year low, gold has become more affordable for those holding other currencies.

In the upcoming meeting next week, the Federal Reserve is expected to hike rates by 25 basis points. This means the rates would hover between 5.25% and 5.5% until potential reductions come into play from 2024 onwards, as suggested by the CME’s Fedwatch tool. It’s pertinent to note that lower interest rates diminish the opportunity cost associated with holding non-yielding bullion. Simultaneously, the European Central Bank is also predicted to implement a rate increase of 25 basis points next week.

For investors, thedata on initial jobless claims in the United States is of significance. Slatedfor release later today, this data pertains to the week of July 15. Projectionsindicate a rise to 242,000 from the previously seasonally adjusted 237,000. TheSPDR Gold Trust, recognized as the world’s largest gold-backed exchange-tradedfund, has seen a slight increase. Its holdings have climbed almost 0.2% to913.80 tonnes on Wednesday, up from 912.07 tonnes on Tuesday. This is the firstrise witnessed in nearly three weeks.

In other developments,China is likely to maintain its lending benchmarks, as indicated by a Reuterssurvey. This decision comes at a time when there’s increasing anticipation offurther stimulus, especially given the rapidly faltering economy. As for othermetals, spot silver remained stable at around $25.16 per ounce. Platinum andpalladium experienced minor drops, with the former down by 0.1% to $972.48 andthe latter decreasing by 0.3% to $1,303.39.

Gold Chart ($/oz)

Silver Chart ($/oz)

Platinum Chart ($/oz)

Palladium Chart ($/oz)

This document is issued by Value Trading BV. While all reasonable care has been taken in preparing this document; no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only and for private circulation. It does not constitute any offer, recommendation or solicitation to any person to enter into transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.