Daily Market Analysis

Latest Economic Insights

Key Headlines:

• The dollar steadies above 99 with the US inflation report awaited.
• The probability of a US rate hike next week rises to around 71%.
• Gold is trading near $4,300 and is heading for a third consecutive weekly loss.
• The rise in bond yields adds further pressure on gold.
• Brent crude is trading near $105 and West Texas near $100.
• Bitcoin awaits an important regulatory vote in the United States with flows into exchange-traded funds continuing.

Fundamental Analysis

• The Dollar and Monetary Policy
  • The dollar index steadied above the 99 level on Friday after its recovery in the previous session, with investors preparing for the release of the US consumer price index report for August, which may be decisive in determining the Federal Reserve’s decision at its meeting next week.
  • Thursday’s data showed that inflation among US producers accelerated during August, with wholesale energy costs rising as a result of the continuation of the war with Iran, which reinforced concerns over a stronger return of price pressures.
  • This data pushed markets to raise the probability of a US interest rate increase of 25 basis points next week to around 71%, compared with around 61% before the release of the producer price data.
  • US Treasury yields also rose after the first expanded buyback operation carried out by the Treasury Department came in at sizes below the expectations of some investors, which limited the programme’s effect in lowering borrowing costs.
  • Markets’ focus now turns almost entirely to the consumer inflation data, where a high reading could reinforce the probability of a rate hike, while a weaker reading could ease these expectations ahead of the Federal Reserve meeting.

• Gold:
  • Gold traded near the $4,300 per ounce level on Friday after falling by around 2% in the previous session, affected by growing expectations of a US interest rate hike and the rise in Treasury yields.
  • The metal is heading toward recording a weekly loss exceeding 2%, which would be the third consecutive weekly loss, with the continuation of the pressure resulting from higher borrowing costs and yields.
  • The rise in oil prices above $100 also represented an additional pressure factor, as it led to increased inflation concerns and supported expectations of a more hawkish monetary policy.
  • On the other hand, gold remains supported to a limited degree by the elevated geopolitical risks, but this support is still weaker than the effect of interest rate and yield expectations.
  • Today’s consumer price index report remains the most important factor for gold’s movement, where a weaker-than-expected reading could restore some support to the metal, while a strong reading could lead to a continuation of the pressures.

• Oil:
  • Brent crude rose to near $105 per barrel, while West Texas Intermediate moved near $100, with oil heading toward recording strong weekly gains as a result of the continued escalation between the United States and Iran.
  • Oil was on track to achieve weekly gains exceeding 13%, the largest since mid-July, with concerns continuing over long-term disruptions to global energy supplies.
  • According to reports, senior US officials warned President Donald Trump that the war may continue for a long period, while the Iranian leadership showed determination to continue fighting despite the increasing economic costs.
  • Reports also indicate that Iran has rebuilt part of its missile capabilities, which increases concerns over the possibility of intensified attacks on US and Gulf assets should military operations escalate.
  • The past two weeks witnessed a significant increase in attacks, with the United States targeting Iranian oil tankers and Tehran responding with attacks on warships, tankers and US targets in the region.

• Bitcoin
  • Bitcoin is awaiting important regulatory developments in the United States, with the Senate expected to vote on the CLARITY Act around 15 September, which may provide a clearer framework for regulating the digital asset market.
  • The sector also continues to follow the debate over the distribution of powers between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), because any regulatory clarity could directly affect institutional liquidity and activity in the Bitcoin market.
  • At the same time, US-listed Bitcoin exchange-traded funds attracted around $986.9 million during the week ending 4 September, recording a third consecutive week of inflows, with a total approaching $3.8 billion during this series.
  • The technical and on-chain indicators point to the weekly and monthly relative strength index approaching low levels seen previously at important stages of the cycle, while some valuation indicators such as the MVRV Z-Score and the Puell Multiple are still above the historical bottom levels of bear markets.
  • The picture remains mixed, as institutional flows provide support to the market, while the technical structure still needs additional signals to confirm the continuation of the upward trend.

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

• From the United Kingdom, Gross Domestic Product (MoM) (July) 09:00
• From the United States of America, Consumer Price Index (MoM) (August) 15:30
• From the United States of America, Consumer Price Index (YoY) (August) 15:30
• From the United States of America, Core Consumer Price Index Excluding Food and Energy (MoM) (August) 15:30

GOLD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 4,355.36
• First scenario: Buy on a break above 4,368.38
• Targets: 4,400.19 then 4,435.33
• Alternative scenario: Sell on a break below 4,326.90
• Targets: 4,292.72 then 4,259.98
• Note: Gold is still under selling pressure and is trading below the main moving averages despite the current rebound. A break above 4,368.38 supports an extension of the upward correction, while a break below 4,326.90 makes a resumption of the downward trend toward the next support levels more likely.

CRUDE OIL

• Trend: Bullish
• Timeframe: 30 minutes
• Current price: 99.85
• First scenario: Buy on a break above 101.19
• Targets: 102.91 then 104.81
• Alternative scenario: Sell on a break below 99.06
• Targets: 97.21 then 95.44
• Note: Oil is holding the bullish trend and is trading above the moving averages despite the correction from the recent top. A break above 101.19 supports a resumption of the upward wave, while a break below 99.06 makes an extension of the downward correction toward the next support areas more likely.

EURUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.16065
• First scenario: Buy on a break above 1.16261
• Targets: 1.16534 then 1.16887
• Alternative scenario: Sell on a break below 1.15933
• Targets: 1.15590 then 1.15296
• Note: The euro is moving below the main moving averages with selling pressure continuing. A break above 1.16261 supports a shift in the movement toward an upward correction, while a break below 1.15933 makes a resumption of the decline toward the next support levels more likely.

GBPUSD

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 1.35211
• First scenario: Buy on a break above 1.35346
• Targets: 1.35693 then 1.36057
• Alternative scenario: Sell on a break below 1.35001
• Targets: 1.34647 then 1.34308
• Note: The pound is still under selling pressure and is trading below the main moving averages despite the recent rebound. A break above 1.35346 supports an extension of the upward correction, while a break below 1.35001 restores selling pressure and opens the way for a continuation of the decline.

NAS 100

• Trend: Bearish
• Timeframe: 30 minutes
• Current price: 29,232.15
• First scenario: Buy on a break above 29,323.32
• Targets: 29,456.07 then 29,581.28
• Alternative scenario: Sell on a break below 29,030.20
• Targets: 28,862.23 then 28,652.46
• Note: The index is still under selling pressure and is trading below the main moving averages. A break above 29,323.32 supports an extension of the upward correction, while a break below 29,030.20 makes a resumption of the downward trend more likely.