Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar is heading toward a weekly loss of nearly 1% as pressure on the bond market persists.
• The US Treasury plan to buy back long-term debt is increasing volatility in yields and the dollar.
• Gold is trading above $4,500 and is heading for a third consecutive weekly gain.
• Continued central bank purchases and investment demand are supporting gold.
• The anticipated US sanctions on Iran are reviving supply and inflation concerns.
• Brent crude is trading near $93 and West Texas near $86.
• Oil is heading toward a second consecutive weekly gain.
• Bitcoin is benefiting from a short squeeze amid continued long-term accumulation.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The US dollar index traded near the 98.8 level during Friday’s session and was on track to record a weekly loss approaching 1%, amid the continued impact of the US Treasury Department’s plan to expand its buyback operations of long-term debt and the strong volatility this produced in the bond market.
  • The dollar had come under sharp pressure on Wednesday after the US Treasury Department announced plans to at least double its buyback operations of long-term bonds, in an attempt to improve market liquidity and limit the significant rise in borrowing costs.
  • The move initially led to a strong decline in long-term US Treasury yields, but yields returned to rising the following day amid growing concerns that the buybacks may offer no more than a temporary solution to the problem of rising public debt and US government funding costs.
  • These moves returned the focus to the risks associated with US public finances, since continued increases in debt and borrowing costs could weaken the appeal of the dollar and push investors to increase their holdings of metals and other currencies.
  • On the other hand, monetary policy expectations remain an important factor, especially after the minutes of the Federal Reserve meeting showed that some policymakers favour raising interest rates during the year if inflation risks persist.
  • Oil prices also returned to rising as the United States prepares to announce a broad package of economic sanctions against Iran, which kept energy-related inflation risks present despite the weakness of the dollar and the retreat in some yields.
  • On the economic front, attention today turns to the US manufacturing and services purchasing managers’ indices, which will provide fresh signals about the performance of economic activity at the start of the current period and the strength of demand within the world’s largest economy.
• Gold:
  • Gold moved past the $4,500 per ounce level during Friday’s session and was on track to record a third consecutive weekly gain, benefiting from higher volatility in the bond and currency markets and rising demand for safe-haven assets.
  • The precious metal had risen by more than 4% on Wednesday after the US Treasury Department announced the expansion of its long-term debt buyback programme, which led to a sharp decline in Treasury yields and in the dollar.
  • Gold held on to the greater part of those gains even after yields rebounded, as concerns remained that the government measures may not be sufficient to address the problem of rising borrowing costs over the long term on a permanent basis.
  • Gold also remained supported by strong investment demand and continued central bank purchases, particularly from China, which provides a stable demand base for the metal even amid the volatility of US monetary policy.
  • At the same time, the ongoing tensions between the United States and Iran provide additional support for safe-haven demand, especially with Washington close to announcing new broad economic sanctions against Tehran.
  • However, the rise in oil remains a double-edged factor for gold, since it supports hedging demand on one side, but may revive inflationary pressures and increase the likelihood that interest rates are kept high on the other.

• Oil:
  • Oil prices continued their gains during Friday’s session, with Brent crude trading near the $93 per barrel level, while West Texas Intermediate settled near $86 per barrel.
  • Oil is heading toward a second consecutive weekly gain, after US crude rose by around 6% since the start of the week, amid the continued deadlock between the United States and Iran and the absence of clear indications that the conflict is close to ending.
  • The United States is preparing to announce new economic measures targeting Iran as part of what President Donald Trump described as “economic victory day”, with the details of the initiative to be revealed on Monday.
  • The sanctions are expected to focus on isolating the Iranian economy from international financial and trade channels, including banks, companies, shipping networks, money transfers and smuggling routes.
  • Through these measures, Washington aims to increase economic pressure on Tehran and push it toward returning to negotiations over the conflict, the nuclear programme and control of the Strait of Hormuz.
  • Disputes over the strait still represent one of the most prominent sources of risk for energy markets, as any further escalation could reduce the movement of oil tankers and increase the risk premium on prices.
  • Concerns over global supplies also increased after a series of Ukrainian strikes on Russian energy facilities, which caused fuel shortages in some regions and affected the infrastructure linked to production and distribution.
  • Oil therefore remains supported by a combination of Iranian and Russian risks, with markets continuing to monitor any change in shipping movement through the Strait of Hormuz or any new development in the US sanctions.

• Bitcoin
  • Bitcoin rose with support from a squeeze on short positions, along with a notable increase in open interest and funding rates and a rise in liquidations, coinciding with an increase in spot trading volume.
  • These indicators point to increased speculator activity in the derivatives market, which may amplify price moves in the short term, whether to the upside or the downside.
  • Markets also continue to follow regulatory developments within the United States, where the White House is pushing to pass the CLARITY Act with the aim of providing a clearer framework for regulating the digital currency market.
  • At the same time, the US Securities and Exchange Commission continues to work on new rules for digital assets, while a Senate vote is expected during mid-September, amid continued debate over the distribution of regulatory powers between the SEC and the CFTC.
  • Any progress in the regulatory framework could provide support to the market by increasing the clarity of the rules for financial institutions and large investors, while a delay in the legislation could prolong the state of uncertainty.
  • Glassnode data showed that high-conviction investors have continued to accumulate Bitcoin steadily since January, and that their share of total supply has become higher than it was during the previous cycle.
  • This behaviour resembles the accumulation pattern that appeared during 2022, which points to long-term demand despite the significant volatility the market is witnessing in the short term.
  • On the other hand, the rise in leverage and funding rates must be monitored, because an excessive build-up of long positions could leave the market more vulnerable to sudden liquidations if the price reverses.

Today’s Economic Data (GMT+3 / KSA time)

• From the United States, Manufacturing Purchasing Managers’ Index 16:45
• From the United States, Services Purchasing Managers’ Index 16:45

GOLD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 4,558.96
• First scenario: Buy on a break above 4,579.71
• Targets: 4,611.48 then 4,646.63
• Alternative scenario: Sell on a break below 4,538.20
• Targets: 4,504.01 then 4,471.28
• Note: Gold is holding a strong bullish trend and is trading above the moving averages after a clear upward wave. A break above 4,579.71 supports an extension of the advance, while a break below 4,538.20 points to the start of a correction toward the lower support areas.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 87.93
• First scenario: Buy on a break above 89.10
• Targets: 90.82 then 92.73
• Alternative scenario: Sell on a break below 86.97
• Targets: 85.12 then 83.35
• Note: Oil is holding the bullish trend and is trading above the main moving averages despite the current consolidation. A break above 89.10 supports a resumption of the advance, while a break below 86.97 weakens the current structure and opens the way for a downward correction.

EURUSD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 1.16951
• First scenario: Buy on a break above 1.17064
• Targets: 1.17343 then 1.17696
• Alternative scenario: Sell on a break below 1.16741
• Targets: 1.16398 then 1.16105
• Note: The price is holding a bullish structure and is trading above the moving averages. A break above 1.17064 supports a continuation of the advance toward the higher levels, while a break below 1.16741 opens the way for a downward correction.

GBPUSD

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 1.36471
• First scenario: Buy on a break above 1.36628
• Targets: 1.36957 then 1.37321
• Alternative scenario: Sell on a break below 1.36265
• Targets: 1.35911 then 1.35572
• Note: The pair is moving within a clear bullish trend with the price remaining above the moving averages. A break above 1.36628 confirms the completion of the upward move, while a break below 1.36265 could push the price into a correction toward the lower support areas.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,336.65
• First scenario: Buy on a break above 29,479.66
• Targets: 29,612.41 then 29,737.61
• Alternative scenario: Sell on a break below 29,186.53
• Targets: 29,018.57 then 28,808.80
• Note: The general trend is still bearish and the price is trading below the main moving averages, so selling pressure remains in place as long as the price is below 29,479.66, while a break below 29,186.53 supports a continuation of the decline toward the lower levels.