GOLD
Gold prices dropped over 1% to $2,320.00 per ounce on Friday due to a stronger dollar and higher bond yields following strong US business activity data. The dollar reached its highest level over seven weeks. Despite a 63% chance of a Fed rate cut in September according to the CME Fed Watch Tool, lower interest rates reduce the opportunity cost of holding non-yielding bullion.
XAUUSD (H4). Gold broke through the bearish projected line formed last month, but was pressured by the strong dollar. Gold is likely to remain within its weekly pivot between 2300.00 and 2345.00.
WTI Crude Oil
US crude oil posted its second consecutive weekly gain, rising nearly 2.9% for the week despite a price drop on Friday. This increase is driven by surging gasoline demand, which reached 9.4 million barrels each day, the highest level since the Covid-19 pandemic. Global oil demand has grown by 1.4 million bpd in June, spurred by US consumption and strong summer travel in Europe and Asia. Oil inventories increased by 15 million barrels as China restocked, but JPMorgan expects drawdowns later in the summer.
WTIUSD (Daily). Breaking the bearish projection line last week, this commodity reached the Fibonacci 61.8% level at 81.50. A minor correction to the 38.2% level at 78.00 is expected before continuing its bullish momentum.
GBP
The Bank of England (BoE) kept interest rates steady at its June meeting, although the decision was "finely balanced" after UK inflation hit its 2% target. This increased the chance of an August rate cut to nearly 50-50. The central bank's key rate remains at a 16-year high of 5.25%. Seven Monetary Policy Committee members voted to hold the rate, while two favoured a 25-basis-point cut, mirroring the May vote. Despite inflation cooling to 2% in May, high rates of services and core inflation indicate potential ongoing pressure. The decision comes ahead of a general election, with the economy and growth proposals being key issues.
GBPUSD (Daily). The downfall of this pair is inevitable after breaking through the bullish projected line of the last 2 weeks. GBPUSD may fall further towards the Fibonacci correction level of 61.8% at 1.2615.
CHF
The Swiss National Bank (SNB) lowered its key interest rate by 25 basis points to 1.25%, aligning with the expectations of two-thirds of economists polled by Reuters. This decision comes amid mixed global sentiment on monetary policy easing. The SNB's inflation forecast for this year is 1.3%, dropping to 1.1% in 2025 and 1.0% in 2026, assuming the interest rate remains at 1.25%. SNB Chair Thomas Jordan cited declining inflationary pressures, a strong Swiss franc and global uncertainty as factors in the rate cut. He mentioned readiness to intervene in the foreign exchange market if necessary. Jordan will attend his final SNB policy meeting in September.
USDCHF (Daily). This pair failed to break the strong support area around 0.8850 and had a fierce rebound in the last 3 days. With the SNB looking more dovish than the Fed, we expect this pair to be trading towards the 0.9060 level.
Fullerton Markets Research Team
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