Daily Markets

• A surge in the yen to a seven-month high led a broad dollar fall, as a slew of economic data last week raised the prospect of a U.S. economic downturn and bigger interest rate cuts from the Federal Reserve. Weaker-than-expected U.S. jobs data, along with disappointing earnings reports from large technology firms and heightened concerns over the Chinese economy, have sparked a global sell-off in stocks, oil and high-yielding currencies in the past week as investors sought the safety of cash. The selling continued on Monday, with U.S. Treasury yields falling further, stock indexes in the red, bitcoin dumped and the dollar losing ground. Treasury yields have been falling sharply since last week, when the Fed kept the policy rate in its current 5.25% to 5.50% range while Fed Chair Jerome Powell opened the possibility of a rate cut in September But by Friday, after data showed the unemployment rate had jumped, expectations for rate cuts rose The Japanese yen's surge comes as traders aggressively unwound carry trades. So-called carry trades, where investors borrow in money from economies with low interest rates such as Japan or Switzerland to fund investments in higher-yielding assets elsewhere, have been popular in recent years. Meanwhile, the Swiss franc, another popular carry trade funding currency, was 0.83% higher at 0.85 to the dollar. The franc, a traditional safe haven, was also trading near a seven-month high. The dollar found some relief against the British pound as the marked deterioration in global investor risk sentiment sapped demand for riskier currencies.
• Gold has been the standout commodity performer so far this year, gaining 18.5% and posting a record high. But the precious metal may become a victim of its own success, with consumer buying at risk from the surge in prices The World Gold Council released its quarterly report last week and the industry group reported total demand of 1,258.2 metric tons in the second quarter, the highest on record for a second quarter and some 4% above the same period in 2023. But the breakdown of the demand figures shows some trends that may point to a slowdown in coming quarters. The biggest gain in demand was from what the Council called the Over The Counter (OTC) market, which largely means buying from institutional investors, high net-worth individuals and family offices. OTC demand was 329.2 tons in the second quarter, up 53% from the same quarter in 2023 and a massive jump of 385% from the first quarter. The Council attributed the surge in OTC appetite to "portfolio diversification," which leads to the question as to how sustainable this demand is, given that once these investors have reached the point where they feel they have sufficient gold in their asset mix, they will likely ease back on purchases. The report also showed a strong decline in jewellery consumption, which dropped to 390.6 tons in the second quarter, down 19% from the same period in 2023.Both of these signal that consumers may be starting to pull back on purchases because of the strong gain in prices. Of particular concern is jewellery demand in China and India, the two largest buyers of physical gold, which together account for almost half the market. A further sign that China's appetite for gold may be waning somewhat was the 18% drop in net imports via Hong Kong in June, with official data showing imports of 21.92 tons, down from 26.72 tons in May. China doesn't disclose gold import volumes, making the Hong Kong data a key proxy for demand in the world's top consumer. Higher prices also likely weighed on flows into Exchange Traded Funds (ETFs), with the Council figures showing a net drop of 7.2 tons in the second quarter, which followed a decline of 113 tons in the first. Central bank buying also eased in the second quarter, coming in at 183.4 tons, down from the 299.9 tons in the first, although up 6% from the 173.6 tons in the second quarter of 2023. rise to a record high for gold is starting to crimp some of the more price-sensitive demand. But it's not all bad news, with investor interest likely to be maintained by the ongoing expectation that monetary policy in several key countries is likely to be eased, with a particular focus on likely interest rate cuts by the U.S. Federal Reserve. High geopolitical tensions, with ongoing conflict in the Middle East and Ukraine, as well as political risk surrounding what is shaping to be a tight U.S. presidential election are also likely to keep interest in gold high. The combination of bearish and bullish factors for the yellow metal may end up having the effect of keeping the price in a relatively narrow range for the rest of the year. The opinions expressed here are those of the author, a columnist for Reuters.

Gold – XAU

Gold on Monday made its intraday high of US$2458.68/oz and low of $2364.18/oz. Gold is down by 1.400% at S$2409.79oz.

Technicals in Focus:

On the daily charts, gold trades higher than 20DMA (2197). If it drops below this level, it could lead to 2,100. The MACD is currently above the zero line and the histograms are showing an increasing trend, indicating that there may be upward movement in the coming sessions. The RSI is currently at 83.04, which is in the overbought region, suggesting there may be selling pressure in the next 2 to 3 sessions. The Stochastic Oscillator is also in the overbought territory but has given a positive crossover, indicating a bullish stance for intraday trades, but rebound in expected in all the overbought indicators.

Trading Strategy: Sell on Strength

Sell below 2420-2520 keeping stop loss closing above 2520, targeting 2400 and 2384-2370-2362. Buy in between 2400-2350 with risk below 2350 targeting 2418-2432-2,4502470-2484 and 2490-2500.

Silver - XAG

Silver on Monday made its intraday high of US$28.65/oz and low of US$26.48/oz settle up by 0.154% at US$27.22/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 20MA (25.05), breakage above will lead to 23.73. MACD is below the zero line and histograms are increasing trend, bringing a bullish stance in the upcoming sessions. RSI is in the oversold region, indicating a sell signal for now. The Stochastic Oscillator is in the overbought region and gives a positive crossover to show an upside move for the intraday trade.

Trading Strategy: Buy on Dips

Buy in between 27.00-25.90, targeting 28.00-28.50-29.70 and 30.50-31.10- 31.90 with stop loss should be placed on the breakage below 25.00. Sell in between 28.90-31.00 with a stop loss above 31.50 targeting 28.50-28.00-27.60 and 27.10-26.50-26.00.

Oil - WTI

Crude Oil on Monday made an intra‐day high of US$73.85/bbl, an intraday low of US$71.15/bbl, and settled down by 0.009% to close at US$73.39/bbl.

Technicals in Focus:

On daily charts, oil is sustaining above its 100DMA i.e. 75.37, a support level, and breakage above will call for 77.48. MACD is above the zero line and histograms are in increasing mode will bring a bullish stance in the upcoming sessions. The Stochastic Oscillator is in the overbought region, giving a negative crossover to confirm a bearish stance; while the RSI is in the neutral region, more upside can be expected to reach the overbought region, which is highly probable.

Trading Strategy: Neutral to Sell

Sell in between 73.90-77.00 with stop loss at 77.00; targeting 72.50-71.90-71.00 and 70.55-69.90. Buy above 73 .00-69.50 with risk daily closing below 69.00, targeting 73.10-73.90-74.50 and 76.50-77.40-78.00.

EUR/USD

EUR/USD on Monday made an intraday low of US$1.0891/EUR, a high of US$1.1008/EUR, and settled the day up by 0.269% to close at US$1.0951/EUR.

Technicals in Focus:

On daily charts, prices are sustaining above 100DMA (1.0800), which becomes immediate support, a break below will target 1.0717. MACD is above the zero line and histograms are increasing mode, bringing a bullish view. Stochastic is in oversold territory, giving negative crossovers to the bullish outlook for intraday. 14D RSI is currently in a neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Sell

Sell below 1.0960-1.1100, targeting 1.0700-1.0640-with stop-loss at daily closing above 1.1100. Buy above 1.0900-1.0450 with risk below 1.0400 targeting 1.0845-1.0890 and 1.1020-1.1105-1.1145.

GBP/USD

GBP/USD on Friday made an intra‐day low of US$1.2706/GBP, a high of US$1.2839/GBP, and settled the day up by 0.548% to close at US$1.2805/GBP.

Technicals in Focus:

On daily charts, prices are sustaining above 50DMA (1.2674) is becoming a support level. 14-D RSI is currently in a neutral region and direction is difficult to predict on an RSI basis. The Stochastic Oscillator is in oversold territory and gives a positive crossover to confirm a bullish stance. MACD is above the zero line, but histograms are increasing leading to movement.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy in between 1.2760-1.2500 with a target of 1.2830-1.2890-1.2990-1.3040 and 1.3100-1.3150 with a stop loss closing below 1.2050. Sell in between 1.2830-1.3100 with targets at 1.2720 and 1.2670-1.2610-1.2500 with a stop loss of 1.2950.

USD/JPY

USD/JPY on Monday made an intra‐day low of JPY141.67/USD an intraday high of 146.55/USD, and settled the day down by 1.161% at JPY144.14/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 100DMA (155.35), major support on the daily chart. 14-D RSI is currently in the overbought region and chances of downward are expected based on RSI. MACD is above the zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in overbought territory and signaling to sell as it has given a negative crossover to confirm a bearish stance.

Trading Strategy:

Sell below 146.00-150.00 with risk above 150.00 targeting 145.00-144.20-143.60 and 142.90-141.70-141.00. Long positions above 145.00-141.00 with targets of 146.00-146.45-146.90 and 147.50-148.40-149.00 with stops below 146.00.