Account
New to ADSS? Open an
account now to get started.
Already have an account?
Add funds to your ADSS account
Account
New to ADSS? Open an
account now to get started.
Add funds to your ADSS account
What’s happening: Gold prices declined by more than 1% on Wednesday amid strength in the US dollar.
What happened: The safe-haven metal came under pressure during Wednesday’s session despite entering 2024 on a strong note.
However, the outlook for gold remains strong due to prospects of rate cuts by the US Federal Reserve this year.
Why it matters: Gold remained on a steep uptrend through most of last year, adding around 13% in 2023, which represents its first yearly surge since 2020. Markets are optimistic about the yellow metal reaching fresh highs this year as major central banks are expected to cut interest rates.
Traders widely expect the US Federal Reserve to lower its benchmark interest rate by 25 basis points at the March meeting.
Traders remained cautious at the start of the session on Wednesday, ahead of the release of minutes from the Fed’s latest policy meeting. Fed officials reiterated that interest rates could be lowered this year but offered no indication of the timing of the cuts.
Markets also assessed some key economic reports from the US. The number of job openings in the country declined by 62,000 to 8.790 million in November, the weakest reading since March 2021. The ISM manufacturing PMI for the US edged higher to 47.4 in December, from November’s reading of 46.7. Yet, the reading signalled the 14th straight month of contraction in factory activity.
Strength in the greenback exerted pressure on gold, as this makes US dollar-priced metals more expensive for foreign buyers. The US dollar index, which measures the greenback’s performance versus a basket of major peers, added around 0.3% to reach 102.49 on Wednesday.
Gold for February delivery tumbled $30.60 to close at $2,042.80 per ounce on Wednesday.
In other metal trading, silver for March delivery declined 79 cents to $23.16 per ounce, while March copper lost 2 cents to $3.86 per pound, platinum fell to $987.1 and palladium settled lower at $1,071.10.
What to watch: Investors await the release of jobs data from the US on Friday. The US economy, which added 199,000 jobs in November, is expected to record 150,000 job adds in December. Analysts expect the unemployment rate in the US to rise to 3.9% in December, from 3.7% in November.
Markets will also monitor the ongoing geopolitical tensions, which had sent gold sharply higher in 2023.
Context: London stocks closed lower on Wednesday, with the blue-chip FTSE 100 index declining to its weakest in two weeks.
Details: UK stocks came under pressure on Wednesday, amid an increase in bond yields and a plunge in mining and personal goods shares.
The yield on the UK 10-year benchmark note rose for the fourth straight session on Wednesday. Shares of precious metal miners fell about 2.7%, while stocks of heavyweight industrial metal miners tumbled around 2.6%, as strength in the US dollar exerted pressure on global metal prices.
The personal goods index lost around 2.8% on Wednesday, after Burberry’s shares tanked 3% following a downgrade in rating by Stifel. Shares of Entain Plc also edged lower after Ricky Sandler was named as a non-executive director.
The FTSE 100 index fell 0.51% to close at 7,682.33 on Wednesday, while the midcap FTSE 250 index lost 0.95% to settle at 19,326.40, recording its biggest single-session plunge in over a month.
What to watch: Investors await the release of economic data on money supply M4, services PMI and composite PMI from the UK today. M4 money supply in the UK, which rose by 0.3% to £2.989 trillion in October, is expected to increase by 0.1% in November.
Analysts expect the S&P Global/CIPS UK services PMI to increase to 53.7 in December, from 50.9 in the prior month, while composite PMI is projected to rise to 51.7 in December, from 50.7 a month ago.
Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.76%, 0.80% and 1.06%, respectively.
Russia accidentally bombed one of its own villages near Ukraine. The news sent the RUB/USD forex pair slightly lower this morning.
Ireland’s AIB services PMI fell to 53.2 in December, from 54.2 in November. However, services activity still remained in the expansion zone, lending support to the EUR/USD forex pair.
Singapore’s S&P Global PMI fell to 55.7 in December, from a 12-month high of 55.8 in November, which sent the SGD/USD pair lower in forex trading this morning.
Japan’s au Jibun Bank manufacturing PMI was revised higher to 47.9 for December, versus a flash reading of 47.7. However, the latest reading still represented a decline from November’s 48.3 and exerted pressure on the JPY/USD forex pair.
Australia’s Judo Bank composite PMI rose to 46.9 in December, from 46.2 a month ago, which sent the AUD/USD pair higher in forex trading this morning.
South Africa’s S&P Global PMI, France’s inflation rate, new passenger car registrations, services PMI and composite PMI, Spain’s services PMI and composite PMI, Italy’s services PMI and composite PMI, Germany’s consumer price inflation, services PMI and composite PMI, Eurozone’s services PMI and composite PMI, UK’s consumer credit, mortgage approvals, mortgage lending and net lending to individuals, Brazil’s value of outstanding loans, producer prices, services PMI and composite PMI, US Challenger job cuts, ADP Employment change, initial jobless claims, continuing jobless claims, services PMI, composite PMI, Logistics Manager’s Index, natural gas stocks change, crude oil inventories, gasoline stocks change and distillate inventories, Canada’s services PMI and composite PMI, as well as Türkiye total vehicle sales.
ADSS
8th floor, CI Tower
Corniche Road
PO Box 93894
Abu Dhabi
United Arab Emirates
Trading Services
ts@adss.com
+971 2 657 2414
Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.
ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
