Gold price builds on the previous day’s bounce from the $1,914-$1,913 area, or the weekly low and gains some positive traction during the Asian session on Friday. The XAU/USD trades around the $1,925 region, up just over 0.20% for the day, and for now, seems to have snapped a three-day losing streak.

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• Gold price recovers some lost ground around $1,920 amid the USD demand.
• Hawkish comments from Federal Reserve (Fed) Chair Powell drags gold price lower.
• Investors will closely watch the preliminary US S&P Global/CIPS PMI data.

Gold price (XAU/USD) recovers its recent losses after retreating to a weekly low of $1,913 during the early Asian session on Friday. As of writing, XAU/USD was up 0.08% on the day at $1,921.62.

In a press conference on Wednesday, Federal Reserve (Fed) Chairman Jerome Powell reaffirmed the Fed’s commitment to achieving 2% inflation. Powel added that the Fed is prepared to raise interest rates if necessary.

According to the Fed’s most recent quarterly predictions, the benchmark overnight interest rate may be raised one more time this year to a peak range of 5.50% to 5.75%, and rates may be substantially tighter through 2024 than previously anticipated.

In addition, the Fed revised its Summary of Projections (SEP), indicating that Fed officials anticipate that interest rates will reach 5.1% by the end of 2024 (up from 4.6% previously). It’s worth noting that rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a negative outlook for precious metals.

About the data, the US weekly Initial Jobless Claims dropping to 201K, the lowest level since January. Additionally, the Philly Fed dropped to -13.5 in September from 12.0 in the previous reading, worse-than-expected of -0.7.  Existing Home Sales fell to 4.04M MoM in August from the previous reading of 4.07M. 

Looking ahead, gold traders will keep an eye on the preliminary US S&P Global/CIPS PMI data for September due later on Friday. These figures could provide a clear direction for gold price.

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• The GBP/JPY skidded into the 181.00 handle after the BoE stepped back from an anticipated rate hike.
• Inflation might be falling faster than previously thought in the UK, rapidly cooling rate expectations.
• UK retail sales and PMI still in the pipe for Friday.

The GBP/JPY fell out of its recent trading range, colliding with the 181.00 major level before GBP bulls were able to catch a mild intraday relief rally to keep the Guppy trading into 181.30 heading into the end of Thursday trading.

BoE turns dovish on subsiding inflation

The United Kingdom’s (UK) Consumer Price Index (CPI) figures on Tuesday came in below expectations, printing at 0.3% versus the expected 0.7%. The decline in headline inflation was enough to knock the UK’s central bank back from a broadly expected rate hike as inflation appears to recede faster than previously expected.

The Bank of England (BoE) stepped back from the rate hike cycle, holding its benchmark interest rate at 5.25% versus the expected 25-basis-point hike to 5.5%. 

The Bank of Japan (BoJ) is similarly expected to hold interest rates steady at -0.1% when the Japanese central bank meets on Friday.

Friday will also see Retail Sales and Purchasing Manager Index (PMI) figures for the UK. Retail Sales for August are expected to rebound from -1.2% to 0.5%, and Composite PMIs are expected to tick up slightly to 48.7 from 48.6.

The recent miss on CPI could see economic data for the UK come in below expectations, pushing the BoE further back on their rate expectations looking forward.

GBP/JPY technical outlook

The GBP/JPY fell a full percentage point after the BoE blinked on rates, taking the Guppy down into the 181.00 region. GBP bulls were able to recover the pair into 181.30, but further downside remains on the cards if buyers can’t push the pair back towards the 200-hour Simple Moving Average (SMA) near 183.25.

In the meantime, a pattern of lower highs remains intact from late August’s peaks near 186.70.

On the daily candlesticks, the Guppy is set to challenge the 100-day SMA currently parked near 180.00, and a rebound into bullish momentum will need to remount the 186.00 level before extending further.

GBP/JPY daily chart

GBP/JPY technical levels

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The Bank of Japan (BoJ) will hold its Monetary Policy Committee (MPC) meeting on Friday, September 22 and as we get closer to the Interest Rate Decision, here are the expectations forecast by the economists and researchers of eight major banks. 

No change is expected, especially after reports emerged last week that BoJ policymakers were concerned with how markets took Governor Ueda’s recent comments.

ANZ

We don’t expect the BoJ to change policy at its upcoming meeting, but there is a good chance it drops its guidance that it won’t hesitate to take additional easing measures. Our inflation outlook suggests that the BoJ won’t be dropping its negative rate policy for the foreseeable future despite Ueda’s claim there is a non-zero chance of it happening by year’s end.

Standard Chartered

We expect the BoJ to keep its policy balance rate unchanged at – 0.1% and the 10Y yield target at 0.0%. We think stickier-than-expected inflation may make the central bank hawkish. BoJ Governor Kazuo Ueda has discussed the possibility of lifting negative interest rates as part of the central bank’s strategy to address ongoing inflation and wage increases. However, he clarified that this decision is not imminent but could be considered in the future.

Deutsche Bank

We expect the BoJ to stick to its current policy stance but revise the MPM statement to point to policy normalisation. Further out, we see the YCC and negative interest rate policy ending at the October and January meetings, respectively.

Danske Bank

We expect no changes in monetary policy by the BoJ. We do however expect another tweak to YCC later this year.

ING

The BoJ is likely to stay pat. The central bank could however probably send a subtle hawkish message to the market after higher-than-expected inflation and a weak JPY, combined with rising global oil prices, pushed inflation up further.

TDS

We expect BoJ to leave all policy levers unchanged and doubt the BoJ is eager to spring another curveball at markets after July’s surprise YCC tweak. Instead, a lot of focus will be on Ueda’s comments on the Yen as he may be under pressure to lean against JPY weakness in his remarks after USD/JPY continues to drift towards 150 despite verbal interventions from MoF officials.

SocGen

We expect the BoJ to pursue its main monetary policy, i.e. YCC and ETF purchases,  but it may reiterate the somewhat hawkish message from Governor Ueda, which, in our view, was aimed mostly at containing the mounting depreciation pressure on the Yen.

Wells Fargo

We believe the BoJ will ultimately choose to keep the current policy rate of -0.10% in place, and we also believe the BoJ will opt to not make any further adjustments to its YCC policy. Our rationale stems from a seemingly unsustainable source of Japan’s inflation as well as recent comments that suggest policymakers still prefer to keep monetary policy accommodative. Global bond yields are close to topping out and should eventually move lower next year as central banks flip to easing. As the Fed approaches rate cuts and US yields fall, bond yield differentials between JGBs and Treasuries should narrow, ultimately supporting the Yen over the course of 2024. JPY is very sensitive to yield differentials, and as yields narrow, the Yen can be the key outperformer in the G10.

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• Natural Gas is up 0.90% as gas demand from Pakistan is expected to pick up.
• The US Dollar strengthens, though it faces headwinds from other central bank decisions on Thursday.
• US Natural Gas prices are in an ascending trend line formation and could break above $3.

Natural Gas prices are grinding higher again in a choppy week with several positive and negative headlines guiding gas prices. The biggest headline on Thursday is Pakistan hitting gas markets in search of LNG as its domestic gas production dwindles. If this trend persists, Pakistan’s demand could triple in five years.

The US Dollar (USD) gained strength as the US Federal Reserve (Fed) delivered what was expected: a hawkish pause. The devil was in the details in the Dot Plot, in which the Fed is anticipated to hold rates  above 5% for the most part of 2024. In the previous forecast, the Dot Plot showed rates between 4.5% and 5%. This surprise jacked up the 2-year US Treasury yield,  which peaked at a 16-year high at 5.1973%. The news fuelled a rally in the Greenback.

Natural Gas is trading at $2.955 per MMBtu at the time of writing.  

Natural Gas news and market movers

• The Energy Information Administration (EIA) is set to deliver the weekly gas storage changes at 14:30 GMT. Another build is expected from 57 billion to 67 billion. 
• China is set to launch new LNG Futures contracts later this year. The proposed sizes per contract will be 20 tons and limits are in place with a maximum of 8% fluctuations from the previous day’s settlement. China is seeking more influence in the gas market by setting Asian gas prices. 
• The demand side could be in for a big newcomer to the market as Pakistan sees its local gas production slowing down from 6 billion cubic feet per day to  3.8 billion cubic feet. Local demand is expected to remain unchanged, so Pakistan will need to buy its gas abroad. This  means that Pakistan could triple its demand on the market in the coming five years.
• The Norwegian Troll Fields supply is coming back online after repeated and prolonged delays. 
• Germany is due to hold tests on Thursday to see if it would be able to make it through the winter in case of gas shortages. 
• Headlines suggest that Chevron and the unions are nearing a deal to end local shutdowns in Australia. . Chevron Union workers are expected to follow the recommendations from the Fair Work Commission, the country’s workplace relations tribunal. 

Natural Gas Technical Analysis: bullish triangle chart

Natural Gas appears to be in a bullish triangle with on the top side a triple top at $3.06 on the daily chart. Meanwhile, higher lows are being formed with the green ascending trend line showing support since the beginning of September. Expect to see a breakout above $3.06, which means natural gas prices are set to jump higher. 

Awaiting the breakout of the triangle, $3 remains a key level that needs to be broken. Seeing the current equilibrium, a catalyst is needed to move the needle upwards. Gas prices could rally to $3.25 in the bullish triangle breakout, testing the upper band of the ascending trend channel.

On the downside, the ascending trend line at $2.90 should support any attempts to break lower. The 200-day Simple Moving Average (SMA) at $2.80 could act as circuit breaker in case there is a nosedive move. Should that give way on a downside move, some area will be crossed before the next support kicks in at $2.75. This level aligns with the 55-day SMA, which is likely to step in to avoid any nosedive moves in the commodity. 

XNG/USD (Daily Chart)

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In an interview with an Irish newspaper on Thursday, European Central Bank (ECB) policymaker Gabriel Makhlouf said that “a further rate hike is possible.”

Additional comments

There’s little chance of a rate cut before March.

We are not saying that at the next meeting we will hold.

If inflation stays the same, rates may not have to rise.

ECB rates could just stay where they are for longer.

Market reaction

EUR/USD seems to be finding fresh demand on the hawkish comments, recovering to 1.0640, still down 0.18% on the day.

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The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Thursday at 7.1730, compared with the previous day’s fix of 7.1732 and 7.3052 estimated.

Furthermore, the PBoC injects 169 billion Yuan into Open Market Operations (OMOs) via 7-day reverse repos (RRs) at an unchanged rate of 1.8%.

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• Chainlink price is up 20%, rising from the September 12 low of $5.808 to $6.887, the current price value.
• LINK is at crossroads after meeting the supply zone at $7.103. The $7.361 level is the roadblock to beat.
• A rejection from the $7.103 level could plunge the altcoin back below the $6.609 support level.

Chainlink (LINK) price is trading with a bullish bias, boasting a successful streak of higher highs and higher lows over the last eight days. The token is now at crossroads as it faces an area defined by aggressive selling.

Also Read: Chainlink could face increased selling pressure as $100 million worth of LINK tokens hit exchanges

Chainlink price, make or break

Chainlink price is facing a make-or-break moment after a rejection from the supply zone at $7.103. Technical indicators say the uptrend could continue with the Awesome Oscillator crossing into the positive zone and the Relative Strength Index (RSI) maintaining an overall upward trajectory.

Increased buying pressure could see Chainlink price venture into the supply zone at $7.103. Confirmation for an uptrend, at least for the short term, would occur upon a break and close above the mean threshold (midline) or this order block at $7.361.

In a highly bullish case, the uptrend could send Chainlink price into a second order block above the $7.637 level, and potentially above the $8.000 psychological level.

LINK/USDT 1-day chart

On-chain metric: GIOM

Data from blockchain analytics platform IntoTheBlock for the Global In/Out of the Money (GIOM) metric shows that Chainlink price has more robust support downward. With this, any efforts to send LINK down would be countered by buying pressure from 33,520 addresses that bought approximately 282.74 million LINK tokens at an average price of $6.75. 

LINK GIOM

Further, the data shows that at the current price, 73.94% of LINK holders are sitting on unrealized profit (in the money), while only 18.36% are sitting on unrealized losses (out of the money). With more in the profit zone, the amount of selling pressure on the token remains low provided the bullish prospects remain, with LINK holders looking to get the most from the current positive outlook. 

On the other hand, a rejection from the supply zone at $7.103 could see Chainlink price pull back, breaching the $6.609 support before a dip into the demand zone at $6.401. This would be the likely turnaround point for LINK because of aggressive buying. However, a solid move below its mean threshold at $6.245 would confirm the continuation of the downtrend, likely shattering the $6.000 psychological level to test the $5.808 swing low. 

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• EUR/USD breaking to the upside as markets position ahead of the Fed.
• The Fed is expected to stand pat on interest rates, give updated economic outlook.
• Fed chair Jerome Powell to hold press conference 30 minutes after data release.

The EUR/USD is stepping higher in the run-up to the Federal Reserve’s (Fed) showing today, reaching for the 1.0750 level. The US Dollar (USD) has been giving up ground to the Euro (EUR) throughout the Wednesday trading session as investors brace for the Fed’s upcoming rate call and updated ‘dot plot’ projections.

Next up: Fed rate, outlook, and press conference

Read more:Interest rates to remain unchanged as end of tightening cycle looms

Markets are broadly expecting the Fed to hold steady on their benchmark interest rate band at 5.25% – 5.5%, but the key to today’s Fed action will be their updated Summary of Economic Projections (SEP). Investors are still currently mixed on their Fed projections for the rest of the year, with 40% of market participants still expecting one more rate hike this year.

 Elsewhere on the docket, the President of the European Central Bank (ECB) Christine Lagarde is slated to give a speech during the Thursday market session. ECB President Lagarde will be delivering speaking notes at the Mediterranean meetings being held in Marseilles.

Friday will also bring Purchasing Manager Index (PMI) data for both the Eurozone and the US, capping off an action-packed midweek.

PMIs for the pan-European economic zone are expected to come in mixed, with the composite figure expected to decline slightly from 46.7 to 46.5.

On the US side, PMIs are forecast to tick upwards, albeit slightly. US manufacturing PMIs are forecast to tick from 47.9 to 48.0, and services is seen giving a similar improvement from 50.5 to 50.5.

EUR/USD technical outlook

The EUR/USD pair is bouncing for Wednesday’s pre-Fed action, climbing over the 200-hour Simple Moving Average (SMA) to claim territory north of the 1.0730 level. The pair kicked off Wednesday’s trading session near 1.0680 and has done nothing but ramp up as Greenback traders hold their orders.

On the daily candlesticks, the EUR/USD has been gaining some bullish momentum from the recent bottom near 1.0650, but the pair is set for a faceoff with a descending trendline from July’s last swing high near 1.1250. Continued upside pressure will also have to contend with the 200-day SMA, currently floating just beneath 1.0850.

EUR/USD daily chart

EUR/USD technical levels

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• AUD/USD rallies to near 0.6500 as the PBoC maintains a dovish interest rate policy.
• The Fed is expected to keep interest rates unchanged at 5.25-5.50% as the US inflation has been consistently falling.
• AUD/USD rebounds after discovering buying interest near the horizontal support around 0.6364.

The AUD/USD pair delivered a rally to near the psychological resistance of 0.6500 in the late European session. The Aussie asset picked strength after the People’s Bank of China (PBOC) kept its one-year and five-year Loan Prime Rate (LPR) unchanged at 3.45% and 4.20% respectively.

The PBoC was expected to maintain a dovish interest rate policy as the Chinese economy is under pressure due to upside deflation risks. Further policy expansion would support the economy to find footing amid a bleak economic outlook.

Meanwhile, the show-stopper event for the FX domain is the interest rate decision by the Federal Reserve (Fed). The US central bank is expected to keep interest rates unchanged at 5.25-5.50%. As the US inflation has been consistently falling while maintaining economic resilience, the Fed has the opportunity to skip the policy tightening regime for the second time in its current tightening cycle.

AUD/USD rebounds after discovering buying interest near the horizontal support plotted from August 17 low around 0.6364 on a two-hour scale. The Aussie asset stabilizes above the 20-day Exponential Moving Average (EMA), which trades around 0.6340. Potential resistance is plotted from August 15 high at 0.6522.

The Relative Strength Index (RSI) (14) jumps above 60.0, which indicates that the bullish impulse has been triggered.

A decisive break above August 15 high around 0.6522 will drive the asset to August 9 high at 0.6571. Breach of the latter will drive the asset towards August 10 high at 0.6616.

On the flip side, fresh downside would appear if the Aussie asset will drop below August 17 low around 0.6360. This would expose the asset to the round-level support of 0.6300 followed by 03 November 2022 low at 0.6272.

AUD/USD two-hour chart 

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