Gold price remains supported near the weekly top amid dovish Fed-inspired USD selling bias.
Renewed concerns about an economic downturn further underpin the safe-haven commodity.
Bulls turn cautious and look to the crucial US NFP report before positioning for further gains.
Gold price (XAU/USD) trades with a positive bias for the third straight day and is placed around the $2,520 area, or the top end of the weekly range during the early European session on Friday. The upside, however, seems limited as traders remain cautious ahead of the crucial US Nonfarm Payrolls (NFP) report, which might influence market expectations about the possibility of a larger interest rate cut by the Federal Reserve (Fed) in September. This, in turn, will play a key role in driving the US Dollar (USD) demand and provide a fresh directional impetus to the non-yielding yellow metal.
Meanwhile, the markets are pricing in a 40% chance that the Fed will lower borrowing costs by 50 basis points (bps) at the end of the September 17-18 policy meeting. The bets were lifted by a mixed bag of US employment data released this week, which provided evidence of a deteriorating labor market. In fact, a report on Wednesday showed that US job openings dropped to a three-and-a-half-year low of 7.673 million in July. Adding to this, Automatic Data Processing (ADP) reported on Thursday that private-sector employment registered the smallest rise since January 2021 and increased by 99K in August.
Furthermore, Chicago Fed President Austan Goolsbee said on Friday that the longer-run trend of labor market and inflation data justify easing interest-rate policy soon and then steadily over the next year. This keeps the US Treasury bond yields depressed at their lowest levels in more than a year and drags the USD away from a two-week high touched on Tuesday, which, in turn, is seen offering some support to the Gold price. Hence, even a slight disappointment from the closely-watched US monthly jobs data could prove negative for the Greenback and pave the way for some meaningful upside for the commodity.
In contrast, the immediate market reaction to the better-than-expected report is more likely to be limited amid the prospects for an imminent start of the Fed’s rate-cutting cycle. Nevertheless, the Gold price remains on track to register modest weekly gains and the fundamental backdrop seems tilted firmly in favor of bullish traders.
Technical Outlook
From a technical perspective, a sustained strength beyond the $2,524-$2,525 hurdle will reaffirm the near-term positive outlook. Given that oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone, the Gold price might then aim to surpass the all-time peak, around the $2,531-$2,532 region touched in August. The subsequent move-up should pave the way for the resumption of a well-established uptrend witnessed over the past two months or so.
On the flip side, the $2,500 psychological mark now seems to protect the immediate downside, below which the Gold price could slide to the $2,471-$2,470 horizontal support. A convincing break below the latter will set the stage for deeper losses towards the 50-day Simple Moving Average (SMA), currently pegged near the $2,440 region, en route to the $2,400 mark and the 100-day SMA, around the $2,388 zone.
Goldman Sachs forecasts that the Pound to Euro (GBP/EUR) exchange rate will strengthen to 1.22 on a 12-month view.
During the week, GBP/EUR strengthened to 5-week highs just above 1.19 before a correction to 1.1875. The pair remains close to the resistance levels above 1.19 which were tested in July.
Other investment banks such as ING have dropped near-term expectations of GBP/EUR losses.
UK and global developments during September could be crucial in determining whether bearish views are reinstated or dropped more permanently.
ING has been bearish on GBP/EUR, but notes that rates have moved in the opposite direction; “The EUR:GBP 2-year swap rate gap shifted in favour of GBP of late thanks to some hawkish repricing in the Sonia curve and markets adding ECB easing bets yesterday. It is now at -146bp, the widest since February, meaning that a rebound in EUR/GBP now requires a meaningful rebuilding in Bank of England easing expectations.”
It added; “That seems unlikely to happen until we get new tier-one data in the UK, as BoE officials have broadly reiterated a cautious stance on easing.”
Euro-Zone data was an important element for the Euro and GBP/EUR during the week.
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There was a further limited retreat in the German IFO business confidence index, reinforcing concerns over the outlook.
Oxford Economics commented; ‘We think it will take Germany’s manufacturing sector until the end of this year to emerge from the economic slump, but the deterioration in the services sector highlights the broad weakness in the German economy.”
German and Spanish inflation readings for August were weaker than expected.
The headline Euro-Zone inflation rate declined to 2.2% for August from 2.6% previously which was in line with consensus forecasts and the lowest reading for three years.
The core rate edged lower to 2.8% from 2.9%.
There are strong expectations that the ECB will cut rates in September.
Domestically, the Lloyds Bank business confidence index held at 50% for August.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, commented; “Overall, the economy looks to be stable and from the positive results recorded, businesses are echoing this sentiment.”
According to Goldman Sachs, UK data signals have been important; “Whereas our constructive view on the Pound relies heavily on its external betas, with the positive global risk sentiment on the back of lower yields helping the currency, domestic data are now playing an increasingly important role.”
JP Morgan noted the recent firm UK data and was particularly impressed by the employment components within the PMI report.
The bank has previously recommended buying GBP/EUR and maintains a positive stance; “We think the relative growth dynamics alone justify the pair trading cheap to fair value, and so that partly motivates our decision to keep the trade on. Elsewhere, we see a potential further normalisation in FX volatility as being favourable for the trade, making it more attractive for GBP longs.
It also considers that GBP/EUR has weathered traditionally negative seasonal factors during the Summer period which increases the scope for gains.
Rabobank also maintains a positive stance; “we look for the pound to perform well against both the USD and the EUR into next spring.”
Credit Agricole expects European currencies will struggle, but with scope for net GBP/EUR gains; “We continue to see the risks for both the EUR and the GBP to the downside from current levels in the near term. In that, the combination of weak economic data, dovish central bank rhetoric and persistent political risks could make the EUR the relative underperformer.”
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Even though natural gas will show strength with today’s close relative to the 200-Day MA, it has not been able to breakout above the 2.30 resistance level. Therefore, it may need a little time with a quick pullback or consolidation before it tries. The narrow range day shows momentum diminishing at a likely resistance level.
A decisive breakout above the 50-Day MA occurred yesterday, so support may be seen there if it is reached. It would be a stronger indication of demand if support is found above or at the 50-Day MA rather than below it. Yesterday was the first daily close above the 50-Day line since July 2 and along with a rise above the 200-Day line today shows constructive development of the advance.
Double Bottom Breakout Above 2.30
A decisive breakout above 2.30 will trigger a breakout of a double bottom pattern. The formation points to a potential minimum target of 2.72. That would put it close to the 61.8% Fibonacci retracement level at 2.67. Close enough to consider a potential resistance range from 2.67 to 2.72. However, the first higher target zone is around the 50% retracement at 2.52.
Weekly Chart Confirms Strength
The weekly time frame shows an improvement in the strength of natural gas as well. This week’s closing price will be near the high of the week’s range and the highest weekly closing price in eight weeks. Trading has occurred largely below the 20-Week MA during that time, and it will challenge the 20-Week line at 2.33. It is possible that an advance will see resistance there, but it is also possible that natural gas rises right past it.
For a look at all of today’s economic events, check out our economic calendar.
US employment figures showed that the labor market is slowing down.
The US nonfarm payrolls report showed a smaller-than-expected job increase in August.
US inflation data will be the last major report before the Fed’s policy meeting.
The GBP/USD weekly forecast shows a temporary pause in a solid bullish trend as investors await the first Fed rate cut while the US NFP gives no clear direction.
Ups and downs of GBP/USD
The pound had a bearish week, fluctuating amid mixed US economic data. Meanwhile, the UK provided few catalysts. Employment figures showed that the labor market is slowing down. Vacancies fell more than expected, and private job growth slowed.
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Meanwhile, the nonfarm payrolls report showed a smaller-than-expected job increase in August. However, the unemployment rate held steady at 4.2%. Meanwhile, data on business activity in the services sector showed a better-than-expected improvement, indicating a resilient economy.
Next week’s key events for GBP/USD
Next week, investors will pay attention to the UK’s employment and GDP data. Meanwhile, the US will release consumer and producer inflation data. The pound has benefitted in recent weeks due to expectations for fewer rate cuts in the UK compared to the US.
Therefore, if UK wage growth confirms fears that British services inflation remains high, BoE rate cut expectations might drop, boosting the pound. Moreover, the pound would rally, given the declining US labor market. The Fed is in a better position to start lowering borrowing costs.
Meanwhile, US inflation data will be the last major report before the Fed’s policy meeting. Softer-than-expected figures will increase the likelihood of a 50-bps rate cut.
GBP/USD weekly technical forecast: Bullish trend pauses for a brief pullback
GBP/USD daily chart
On the technical side, the GBP/USD price is in a bullish trend. Although the price chops through the 22-SMA, it has maintained an upward trajectory. This means it has made a series of higher highs and lows. At the same time, the RSI has traded mostly above 50, supporting solid bullish momentum.
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Bulls recently broke above the critical resistance level of 1.3000. However, they failed to trade above the 1.3200 resistance, allowing bears to take charge. Nevertheless, the bullish bias remains intact since the price is still above the SMA. Therefore, the pullback will likely pause at the SMA and bounce higher. On the other hand, if it punctures the SMA and the 1.3000 level, it might find support at the bullish trendline. A new high above 1.3200 will continue the bullish trend.
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Goldman Sachs (NYSE:GS) has revised its copper price forecast, significantly lowering its 2025 estimate due to weakening demand from China, a major consumer of the metal.
The American investment bank now anticipates that copper prices will average US$10,100 per metric ton next year, a sharp reduction from its previous forecast of US$15,000.
According to Bloomberg, the US$15,000 prediction came from former analysts Jeffrey Currie and Nicholas Snowdon, while the new outlook was outlined in a note by analysts including Samantha Dart and Daan Struyven.
Explaining their thoughts on China, Dart and Struyven point to its ongoing economic challenges, including a persistent downturn in the property sector and slower-than-expected recovery in manufacturing and exports.
As copper demand from the Asian nation has slowed, inventories of the red metal have risen.
Goldman Sachs has also adjusted its price forecasts for other commodities.
It is now estimating an aluminum price of US$2,540 per metric ton, down from US$2,850. The bank is holding to its bearish outlook on iron ore and nickel, reflecting the broader trend of weaker demand in key markets.
“Softer-than-expected China commodity demand, as well as downside risks to China’s forward economic outlook, lead us to a more selective, less constructive tactical view of commodities,” the analysts said.
China’s economic growth is struggling to meet the government’s 5 percent annual target, primarily due to a surplus of raw material inventories that is unlikely to clear soon due to softening demand.
Goldman Sachs remains optimistic about gold, maintaining a target price of US$2,700 per ounce for early 2025. The bank cites increased interest from managed money players in the west and continued demand from central banks as key factors supporting its positive outlook. Interest rate cuts from the US Federal Reserve are also seen helping gold.
Major miners involved in copper and aluminum production saw share price declines on the news, including Freeport-McMoRan (NYSE:FCX), BHP (LSE:BHP,ASX:BHP,NYSE:BHP) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO).
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Apple’s innovation and profitability have made it an exceptional long-term investment.
Services segment growth has helped offset stagnating iPhone sales.
The company’s aggressive stock buybacks are helping support its share price.
With a market cap of more than $3.53 trillion, Apple is among the world’s most valuable companies. Its advantages ensure it will be a powerful force for years to come.
Apple stock price
Apple has been on the market far longer than many other tech companies. It went public at an initial public offering price of $22 in 1980. Since then, AAPL has been one of the most rewarding tech stocks for long-term investors.
But AAPL didn’t begin to rise rapidly until years after its IPO. The company released the Lisa, a precursor to the Macintosh computer, in January 1983. At this point, Apple stock was around 15 cents, adjusted for future splits. It wouldn’t reach a split-adjusted $1 until the dot-com era. AAPL reached $1 for the first time on Dec. 3, 1999. It dropped again once the bubble burst, falling to under 25 cents in October 2002.
The stock price slowly increased in the ensuing years, reaching a split-adjusted $1 in 2004. It continued growing, crossing the $6 mark in 2007. But it fell back to $3 during the Great Recession in 2008 and 2009.
AAPL has been on the rise since then. On July 15, 2024, it reached an all-time intraday high of $237.23. The stock surged after the company announced a new artificial intelligence platform called Apple Intelligence.
How has the Apple stock price performed?
AAPL has been an exceptional investment. Since its IPO over 40 years ago, it has generated extraordinary returns. In the past five years alone, AAPL has increased by more than 340%.
The iPhone is at the heart of Apple’s sales. But the company’s outperformance has continued even as iPhone sales growth began to stagnate in the mid-2010s.
Apple earnings
In fiscal 2023, Apple’s net sales decreased slightly to $383.3 billion, compared to $394.3 billion in 2022. Gross margin decreased slightly to $169.1 billion, compared to $170.8 billion the year before.
Apple generated most of its sales from the iPhone, totaling $200.6 billion in 2023. Services were a distant second, with $85.2 billion in net sales.
The company increased its cash reserves considerably in 2023 to nearly $30 billion. That was up from $23.6 billion the year before.
Earnings per share were nearly the same at $6.16 in 2023 and $6.15 in 2022. EPS is expected to be $6.70 this year, with an uptick in 2025 to $7.48.
Apple at a glance
Apple is a leading consumer electronics maker. Over half of its fiscal 2023 revenue came from the iPhone.
The company also sells MacBook laptops, iMac desktop computers, iPad tablets and Apple Watches. It generally competes at the medium-to-high end of its product markets and charges premium prices.
The services segment includes sales from the app store, iCloud storage, and advertising businesses. It also includes the Apple Pay mobile payment system and Apple Music. Services segment revenue comprised about 20% of the company’s total sales in fiscal 2023. The services segment also includes subscription revenue from Apple Fitness+, Apple TV+ and Apple One plans.
Apple controversies
Many people love Apple products. But the company isn’t immune to controversy.
One recent controversy involved the company’s proprietary Lightning port. Only Apple devices had this port, requiring specific charging cables. USB-C connectors, compatible with various devices, have become standard in the tech industry.
The European Commission passed a law in 2022 that required all mobile phones sold in the European Union to have USB-C ports by the end of 2024. Apple had little choice but to abandon the Lightning port. At the iPhone 15 announcement in 2023, the company said future generations would have USB-C connectors.
Apple also faced backlash in 2024 over its “Crush!” ad. The ad featured objects like a record player, books and a guitar being crushed into the new iPad Pro. It received widespread criticism for symbolizing tech’s destructive impact on creativity and humanity. Apple later apologized.
Warren Buffett dumping Apple stock
Warren Buffett’s holding company, Berkshire Hathaway, has long been a large holder of Apple stock. That is still true today, as Apple is Berkshire’s single largest portfolio holding. In addition, Berkshire is still one of the largest corporate holders of Apple stock.
However, the company has sold over 500 million shares of Apple stock in 2024 alone. That reduced the company’s Apple holdings by more than half. During Berkshire’s meeting in May, Buffett said he expects capital gains rates to increase. Analysts also believe Berkshire may be looking to increase its cash position.
Apple IPO
Apple went public on Dec. 12, 1980, at $22 per share. The stock has split five times, putting the split-adjusted IPO price at 10 cents per share.
The company raised $100 million with its IPO. Those who made a small investment in Apple’s IPO have greatly benefited. For example, if you invested $1,000 during the IPO, your investment would be seven figures today.
Apple stock splits
Apple’s most recent stock split was 4-for-1 in August 2020. If you crunch the numbers on all five stock splits, a single share of the company’s IPO stock would represent 224 shares of AAPL today.
On a split-adjusted basis, AAPL climbed as high as $1.34 in March 2000 during the tech bubble. But it dropped to under 24 cents in October 2002 after the dot-com bubble burst.
AAPL hit a split-adjusted intraday high of $237.23 on July 15, 2024.
Opportunities and obstacles facing Apple
Apple is well-positioned to continue outperforming. But it faces several potential stumbling blocks.
The company is notoriously secretive about its internal product development. Still, it shows no signs of slowing down on innovation. In June 2024, Apple introduced Apple Intelligence, a new AI technology for iPhone, iPad, and Mac. A year prior, the company unveiled its Apple Vision Pro wearable headset and spatial computer.
Apple’s focus on its high-margin services segment has also created new growth sources for the company. In the third quarter of 2024, it posted an all-time revenue record in services. Product revenue increased year over year as well. But Apple’s stock buyback of more than $110 billion will continue to support its share price.
The company could face regulatory risks regarding AI innovations. But CEO Tim Cook said Apple plans to take a “deliberate and thoughtful” approach. Estimates of iPhone unit sales suggest no meaningful growth since 2015. But by adding AI features to devices, Apple could get customers excited again. That said, iPhone sales decreased slightly year overyear in the third quarter of 2024.
Strengths
A long track record of successful innovation and revolutionary products and services.
The high-margin services segment provides high-visibility growth opportunities.
An aggressive share buyback program will support the stock price.
Weaknesses
A high valuation compared to the competition.
Given declining sales, the iPhone market may be reaching saturation.
Ongoing regulatory risks associated with Big Tech antitrust crackdowns.
Nasdaq: Apple comparison
AAPL is one of the top stocks in the Nasdaq composite index, with a weight of 11.25%, as of June 28, 2024.
The table below lists the 10 stocks with the greatest weighting in the Nasdaq by market cap. It’s reordered daily at market close.
Apple stock forecast 2024
Analysts expect slightly higher revenue for Apple in 2024, with an average estimate of $390.3 billion versus $383.3 billion in 2023. Both numbers are lower than 2022’s revenue of $394.3 billion.
Of the 47 analysts surveyed, 23 recommend buying, nine rate it as “overweight,” 13 recommend holding, one rates it as “underweight,” and one recommends selling. At the time of this writing, the average price target is $244.31.
Apple stock forecast 2025
Analysts project increases in Apple’s revenue in 2025, with an average estimate of $421.4 billion. EPS is expected to increase to $7.48.
AAPL soared after the announcement of the AI platform in mid-2024. The stock is up more than 20% in 2024. But given the $244.31 one-year price target, analysts don’t expect eye-popping returns, at least not immediately.
Making long-term predictions for an individual stock price is extremely difficult. Past performance doesn’t guarantee future results. Whether a stock has done well or fared poorly of late, the tide can shift overnight.
What can we expect in the coming years?
Apple’s bullish performance could continue if it maintains growth in the services segment. The company will likely need to continue growing revenue in various segments to offset slumping iPhone sales in the coming quarters. These include video, AppleCare, cloud services and payments.
Apple must continue to uphold its innovative reputation and keep iPhone users.
Daniel Newman, CEO and analyst at The Futurum Group, said Apple was late to the AI party. But the company is meeting consumers where they are rather than trying to anticipate demand.
“Creating multimodal interactions that can traverse device types and create continuity has been part of Apple’s secret sauce and will continue to be in the AI era,”
Newman said.
Frequently asked questions (FAQs)
The average target among the Wall Street analysts covering Apple stock is $210. Among 47 analysts, 23 recommend buying, nine rate it as “overweight,” 13 recommend holding, one rate it as “underweight” and one recommends selling.
At the time of this writing, AAPL hit an all-time intraday high of $237.23. It reached that price on July 15, 2024.
Apple’s stock has split five times since the company went public. On Aug. 28, 2020, it split 4-for-1. On June 9, 2014, it split 7-for-1. It split 2-for-1 on Feb.28, 2005, June 21, 2000, and June 16, 1987.
AAPL pays a quarterly dividend. Its yield is 0.44%. It pays dividends in February, May, August and November.
USD/JPY downtrend continues, as downward momentum accelerates after volatility from US Nonfarm Payrolls data.
Key support levels include 142.50, 142.00, and today’s low of 141.77, with further downside likely if these are breached.
Resistance stands at 143.44, with higher targets at 144.49 (Tenkan-Sen) and 145.00 (Senkou Span A) if bulls regain control.
The USD/JPY extended its losses late on Friday’s North American session, bolstered by the losses of the yield of the US 10-year T-note. The Greenback recovered some ground against most G8 FX currencies, except safe-haven currencies like the Japanese Yen. At the time of writing, the pair trades at
USD/JPY Price Forecast: Technical outlook
The USD/JPY downtrend continued after the latest US Nonfarm Payrolls report sparked volatility in the pair, which seesawed within a 230-pip range on the day, but as the dust settled, sellers remained in charge.
Momentum had accelerated to the downside, confirmed by the Relative Strength Index (RSI) aiming lower, an indication of a strong trend.
The USD/JPY’s first support would be the psychological level of 142.50. Once surpassed, the next stop would be the 142.00 mark, followed by today’s low of 141.77. Once those two levels are cleared, the drop could extend toward the August 5 low of 141.69.
On the other hand, the first resistance would be the August 26 daily low of 143.44. A breach of the latter would expose key resistance levels. First, the Tenkan-Sen will be at 144.49, followed by the Senkou Span A at 145.00. Up next would be the Kijun-Sen at 145.73.
USD/JPY Price Action – Daily Chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Silver retreats from $29.11 after failing to clear key resistance at confluence of the 50 and 100-day moving averages.
RSI signals strong bearish momentum, with next support at $27.18, followed by $27.00 and the 200-DMA at $26.62.
A rebound above $29.15 could lift Silver toward the key psychological level of $30.00.
The Silver price plunged late in the North American session, down over 3%, and traded at $27.89 after reaching a high of $29.11. Market sentiment turned risk-averse to precious metals, while the Greenback gathered some traction amid falling US yields.
XAG/USD Price Forecast: Technical outlook
Silver prices retreated after testing the confluence of the 50 and 100-day moving averages (DMAs) at around $29.00-$29.15, which exacerbated the precious metal fall of over USD 1.00.
Sellers gathered ground as momentum turned bearish. The Relative Strength Index (RSI) is on a steepest fall, signaling that the downtrend is strong.
Once XAG/USD dropped below $28.00, the next support would be the August 14 swing low of $27.18. If surpassed, bears could drive the spot prices to $27.00 before challenging the 200-DMA at $26.62/
Conversely, if XAG/USD buyers lift prices above $29.15, the precious metal could remain bid. Up next would be the $30.00 figure.
XAG/USD Price Action – Daily Chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
EUR/USD holds steady above 1.1100 after a two-day rally.
The bullish bias remains intact in the near term.
Nonfarm Payrolls in the US are forecast to rise 160,000 in August.
EUR/USD registered strong gains for the second consecutive day on Thursday before entering a consolidation phase above 1.1100 in the European session on Friday. Investors refrain from taking large positions while waiting for the US Bureau of Labor Statistics to release the August jobs report.
The data published by the Automatic Data Processing showed on Thursday that employment in the private sector rose 99,000 in August. This reading missed the market expectation of 145,000 by a wide margin and triggered another leg of US Dollar (USD) selloff.
Nonfarm Payrolls (NFP) in the US are forecast to rise 160,000 in August following July’s disappointing increase of 114,000. In case this data comes in near 100,000, investors could lean toward a large September Federal Reserve (Fed) rate cut and force the USD to continue to weaken against its major rivals. According to the CME FedWatch Tool, markets are currently pricing in a 43% probability of a 50 basis points rate cut at the upcoming policy meeting.
On the other hand, a positive surprise in NFP, with a print close to 200,000, could help the USD rebound and cause EUR/USD to correct lower heading into the weekend.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly below 70, suggesting that EUR/USD has more room on the upside before turning technically overbought. On the upside, 1.1160 (static level) aligns as immediate resistance ahead of 1.1200 (end-point of the latest uptrend) and 1.1250 (static level from July 2023).
In case EUR/USD drops below 1.1100 (100-period Simple Moving Average (SMA), 50-period SMA, Fibonacci 23.6% retracement) and starts using this level as resistance, technical sellers could take action. In this scenario, 1.1040 (Fibonacci 38.2% retracement) could be seen as next support before 1.1000 (200-period SMA, Fibonacci 50% retracement).
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
Saudi Arabia’s state-run oil company has cut its October pricing for its Arab Light crude oil for Asian buyers, according to a fresh price list released on Friday.
Saudi Aramco has cut its Arab Light crude oil by 70 cents, the price list showed.
The news comes as Brent crude prices fell even further, trading at $71.49 per barrel, a $1.20 per barrel decline (-1.65%) on the day and the lowest level in years.
Saudi Aramco has also lowered the price of Arab Light to Europe and the United States.
The price reduction to Asia—Saudi Aramco’s prime market—does not bode well for the oil company’s outlook on Asian demand, with Official Selling Prices for Asia now at their lowest levels in three years, with weak manufacturing activity in China likely the culprit.
Nevertheless, China’s crude oil imports did rebound in August as refiners increased their runs to meet seasonal demand.
Saudi Aramco’s move follows Bank of America’s new price forecasts for next year, which have been downgraded to $75 per barrel for Brent, down from $80. The bank lowered its price forecast for WTI to $71 per barrel from $75.
This weak Asian demand is also likely behind the OPEC+ decision earlier this week to delay its production quota rollbacks that were scheduled to take place in October. A new agreement from OPEC+–likely hard fought with Saudi Arabia spearheading the delay—will see two more months of holding the current production quota levels steady.
Citigroup had warned that Brent could fall below $70 per barrel had OPEC+ followed through with its plans to add production back to the oil market, although the two-month delay hasn’t seemed to have done much better.
