Technical Analysis Today

[Zerologic]

US retail sales data brings gold pullback

After reaching a record high, gold was reluctant to continue its rise ahead of the Fed's meeting to cut interest rates this week. Gold prices yesterday fell to a low of $2560 from a high of $2586 after the US released retail sales data.

US Retail Sales rose 0.1% in August monthly, compared to a revised 1.1% increase recorded in July. However, this was above consensus expectations of a fall of 0.2%, according to data from the US Census Bureau.

US Retail Sales excluding Autos, meanwhile, rose 0.1% after a 0.4% rise in July. This was below the forecast of a rise of 0.2%.

The retail sales data does not seem to support the strengthening of the dollar, but the impact on gold is different.

Gold prices briefly soared to a new all-time high of $2,589 as bets on the Fed cutting double interest rates increased. According to the FedWatch tool from the CME group, the probability of the Fed cutting interest rates by 50 basis points rose by 67% while the probability of a cut by 25 basis points fell by 37%.

In theory, the Fed's interest rate cut will provide support for gold as a non-yielding asset. Many analysts provide bullish support for gold, one of which is Michaël van de Poppe, Founder of MN Consultancy, who predicts a 10 year bullish commodity market including gold.

Today there are no high impact news releases in the economic calendar, but investors will probably consider US Building Permits data which measures permits for building new residential buildings which is estimated at 1.41M from the previous revised data of 1.40M.

 

[Zerologic]

Markets are volatile the Fed cuts interest rates in half including NZDUSD

The Fed finally cut interest rates by 0.50%, higher than the forecast of 0.25%, so that the Fed interest rate is now 5.00%.

The market looks volatile in response to the Fed's interest rate data, all currency pairs with the USD are experiencing turbulence. Gold briefly soared to $2600 but fell again to around $2547. Other currency pairs such as EUR/USD, and GBP/USD experienced similar conditions, rising then falling.

The NZD/USD pair also experienced turbulence after the Fed cut interest rates, this pair drew a bullish candlestick with a long wick on the top candle indicating that a strong rally came under high selling pressure. Yesterday's price formed a low of 0.61809 and a high of 0.62769 closing at 0.62085. The price soars up and then back to the starting point near the middle band line.

Looking for fresh insights into the health of New Zealand's economy, investors will focus on second-quarter Gross Domestic Product (GDP) data, which will be published later today. Zealand's GDP is predicted to fall -0.4% from the previous 0.2%, if the actual data is higher than the forecast it is expected to be good for NZD.

However, investors are also paying attention to US data, especially the FOMC economic projections and Unemployment Claims, which are predicted to be 230k, the same as the previous revision of 230k.