enDaily Analysis 19/12/2024
Latest Economic and Fundamental Insights
Dollar hovers near two-year high amid hawkish Fed signals
The dollar index remained around 108 on Thursday, holding onto gains after rising more than 1% in the previous session to reach its highest level since November 2022.
Gold rises amid prospects of technical recovery
The decline came after the US Federal Reserve signaled a hawkish tone on lower interest rate cuts next year, with the dot chart forecast showing only two rate cuts in 2025, supported by strong GDP growth and persistent inflation.
This expectation has put pressure on demand for gold, as limited monetary easing has reduced the appeal of non-yielding assets such as bullion.
Traders will now be closely watching upcoming US GDP and PCE inflation data this week, which could further influence monetary policy expectations.
Gold prices have jumped more than 27% this year, on track for their biggest annual gain since 2010, driven by U.S. monetary easing, strong safe-haven demand and aggressive buying by central banks.
Gold prices may remain within a specific range in the short term.
Gold prices are expected to remain rangebound in the near term after hitting record highs in recent months, the chief investment officer for multi-asset added. Investors are shifting their money into cryptocurrencies from gold due to US President-elect Donald Trump’s expected push to deregulate.
Meanwhile, central banks are still buying gold as reserves to reduce their reliance on the dollar, however, indicating that rising geopolitical risks will continue to support the longer-term outlook for the precious metal’s price.
Asian stocks fell and the dollar held near a two-year high on Thursday after the U.S. Federal Reserve warned it would ease the pace of interest rate cuts next year, while the yen fell after the Bank of Japan kept interest rates steady.
Oil falls on demand concerns after Fed signals slower monetary easing, with Brent trading at $72.00 and WTI at $69.00
Brent and West Texas Intermediate crude prices fell by 0.6%.
-The US Federal Reserve’s expectations of two interest rate cuts in 2025 raise concerns about demand
-Global oil demand growth in 2024 is about 200,000 barrels per day lower than JP Morgan forecasts
The declines reversed most of the gains made by benchmark crude contracts on Wednesday, when prices settled higher as U.S. crude inventories fell and the Federal Reserve cut interest rates by 25 basis points as expected.
Prices fell after U.S. central bankers forecast two quarter-point rate cuts in 2025 on concerns about rising inflation. That was half a percentage point less than they had forecast as of September.
Low interest rates lower borrowing costs, which should boost economic growth and demand for oil.
“The supply-demand balance through 2025 remains unfavourable, and the forecast of demand growth of more than 1 million barrels per day in 2025 seems overbought in our view. Even if OPEC+ continues to withhold production, the market could remain in surplus,” said Suvro Sarkar, head of the energy sector team at DBS Bank.
Meanwhile, despite a year-on-year increase in demand in the first half of December, volumes remained below some analysts’ expectations.
Global oil demand growth in December so far has been 700,000 barrels per day lower than expected, and for the year so far, global demand is 200,000 barrels per day lower than it forecast in November 2023, JP Morgan analysts said in a note.
Official data from the US Energy Information Administration showed on Wednesday that US crude inventories fell by 934,000 barrels in the week ending December 13, compared with analysts’ expectations in a Reuters poll for a decline of 1.6 million barrels.
-Bitcoin price started to decline again below the $105,000 area. Bitcoin price is down by about 5% and is trying to close below the $100,000 support area.
Smart technical reports
How they work
A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.
If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.
The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.
These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.
GOLD
General trend: Down
Time interval: half an hour (30 minutes)
Current price: 2618.70
Scenario 1: Sell gold with a break and stability below 2613.71, targeting 2607.26 and 2599.43
Alternative scenario: Buy gold with a break and stability above 2625.09, targeting 2631.52 and then 2638.65
Comment: Trading below the resistances and averages suggests a decline.
CRUDE OIL
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: $69.48 per barrel
Scenario 1: Buy oil with a break and stability by closing a candle above the $69.85 levels, targeting $70.32 and then $70.88.
Alternative scenario: Sell oil by breaking $69.17 with a target price of $69.65 then $68.06
Comment: Trading below the resistances and averages suggests a decline.
EURUSD
General trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.03955
Scenario 1: Sell the EUR/USD by breaking 1.03837, targeting 1.03677 and then 1.03464.
Alternative scenario: Buy the EUR/USD with a break and hold with a candle closing above 1.04064, targeting 1.04249 and then 1.04473.
Comment: Trading below the resistances and averages suggests a decline.
GBPUSD
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.26089
Scenario 1: Selling the pound dollar with a break and stability below the level of 1.25917, targeting the price of 1.25676 and then 1.25454
Alternative scenario: Buy the pound dollar with a break and hold with a close above 1.26217, targeting 1.26458 and then 1.26744.
Comment: Trading below the resistances and averages suggests a decline.
NAS100
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 21558
Scenario 1: Selling the Nasdaq with a break and stability with a close below 21461, targeting a price of 21337 and then 21229
Alternative scenario: Buy Nasdaq with a break and hold with a close above 21618 with a target price of 21721 then 21839
Comment: Trading below the resistances and averages suggests a decline.
Economic Calendar
(Times are in GMT+3)
-From Japan, the interest rate decision issued by the Bank of Japan 5:55
-From UK Bank of England Interest Rate Decision Indicator (December) 15:00
-US GDP (QoQ) (Q3) 16:30
-From the United States of America, unemployment claims rates are 16:30.
-From USA Philadelphia Fed Manufacturing Index (December) 16:30
-From USA Existing Home Sales (November) 18:00
Fundamental Analysis
The dollar index held around 108 on Thursday, holding onto gains after rising more than 1% in the previous session to its highest level since November 2022.
The rise came on the heels of a widely expected 25 basis point interest rate cut by the US Federal Reserve on Wednesday, although the central bank signalled smaller rate cuts in 2025 than initially forecast.
The Fed now expects to cut interest rates just two more times next year, a sharp drop from the four cuts expected in its September forecast.
Furthermore, the Fed revised its economic forecasts for 2025, raising its GDP growth and inflation forecasts while lowering its unemployment rate forecast.
As a result, markets now price in a 94% chance that the Fed will keep rates unchanged in January.
Meanwhile, investors are also awaiting monetary policy decisions from the Bank of Japan and the Bank of England.
Gold rose above $2,610 an ounce on Thursday, likely on a technical recovery after losing more than 2% in the previous session.
Oil prices fell in Asian trading on Thursday after the US Federal Reserve indicated it would slow the pace of interest rate cuts in 2025, which could slow economic growth and reduce demand for fuel.
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