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Gold prices enter 'self-propelled phase', testing 5,500 mark, oil prices climb to four-month high
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market www.xmtraders.commentary]: Gold prices entered the "self-propulsion phase", testing the 5,500 mark, and oil prices climbed to a four-month high." Hope this helps you! The original content is as follows:
In early trading in Asia on Thursday (January 29, Beijing time), spot gold trading continued to hit record highs, currently testing the $5,500/ounce mark. This round of gains was mainly driven by continued economic and geopolitical uncertainty, and investors poured into safe-haven assets. The market's reaction to the Federal Reserve's interest rate decision was muted, with analysts pointing out that strong buying of precious metals seemed to have entered a "self-propelled phase"; U.S. crude oil traded around $63.53 per barrel, with oil prices climbing to a four-month high on Wednesday, supported by geopolitical tensions and a weak dollar.
Focus on the day
The stock market
U.S. stocks closed mixed on Wednesday, with the market reacting to the expected Federal Reserve interest rate decision. The Nasdaq index closed slightly higher by 0.17%, driven by chip stocks, the S&P 500 index ended basically flat, and the Dow Jones Industrial Average edged up 0.02%.
As expected, the Federal Reserve kept interest rates unchanged at a range of 3.5%-3.75%. The statement pointed out that inflation is still high, but the job market has shown "signs of stabilization." The market interpretation showed little change in the tone of the statement, with traders still betting that the first rate cut would www.xmtraders.come in June. The S&P 500 briefly broke through the 7,000 mark for the first time during the session, but failed to hold on.
Chip stocks became the bright spot of the market, with Nvidia rising 1.6%, Micron Technology rising 6%, and Intel rising 11%. Texas Instruments surged 9.9% on an upbeat outlook. After the market closed, the "Big Seven" earnings season kicked off. Meta and Tesla's stock prices rose after the release of their earnings reports, while Microsoft fell more than 3% after their earnings reports.
Gold Market
CurrentGold prices soared 4% on Wednesday, surpassing the $5,400 per ounce mark for the first time in history, and have risen more than 25% so far this year. Silver also rose 3.3% to $116.69 an ounce.
This round of gains is mainly driven by continued economic and geopolitical uncertainty, with investors pouring into safe-haven assets. The market's reaction to the Fed's interest rate decision was muted, with analysts pointing out that strong buying of precious metals appears to have entered a "self-propelled phase."
Although technical indicators show that the market is overbought and a correction may occur, analysts believe that bargain hunting remains strong and the upward momentum remains unabated. Other precious metals such as silver also performed strongly, with platinum and palladium rising 2.5% and 7.2% respectively on the day.
Oil Market
Oil prices climbed to a four-month high on Wednesday, supported by geopolitical tensions and a weak dollar. U.S. crude oil futures closed up 1.31% at $63.21 per barrel; Brent crude oil futures closed up 1.23% at $68.40 per barrel. Both benchmarks were on track for their biggest monthly gains since July 2023.
The market was mainly driven by the escalation of tensions between the United States and Iran. U.S. President Donald Trump has urged Iran to return to nuclear deal negotiations or face more severe strikes, while Iran has warned of an unprecedented counterattack. At the same time, a U.S. aircraft carrier strike group has arrived in the Middle East, exacerbating market concerns about supply disruptions.
The fundamentals of supply and demand also provide support. Data from the U.S. Energy Information Administration showed that crude oil inventories unexpectedly fell by 2.3 million barrels last week, while the market had expected an increase. In addition, the winter storm sweeping across the United States caused domestic crude oil production to temporarily drop by about 600,000 barrels per day, accounting for about 4% of the country's total production. The dollar is hovering near four-year lows, also making dollar-denominated crude more attractive to holders of other currencies.
Forex Markets
The U.S. dollar maintained gains against the euro and yen on Wednesday after the Federal Reserve decided to keep interest rates unchanged at its latest policy meeting, noting that inflation remained high and economic growth remained solid, but did not provide clear clues on when it might cut interest rates again in the future. The U.S. dollar index rose 0.8% to 96.667. The euro fell 1% against the dollar to $1.19163; the dollar rose 1.1% against the yen to 153.90 yen.
The dollar's intraday strength was also boosted by a speech by U.S. Treasury Secretary Bessent, who reiterated that the United States pursues a strong dollar policy and denied that the United States was intervening in the currency market to support the yen. Previously, because U.S. President Trump said the value of the U.S. dollar was "great" when talking about it on Tuesday, the market interpreted this as downplaying the recent decline of the U.S. dollar, and the U.S. dollar index once fell to its lowest level since February 2022.
The U.S. dollar index has fallen by nearly 2% this year, continuing last year’s decline of 9.4%. Market expectations for the Federal Reserve to continue cutting interest rates, uncertainty about tariffs, concerns about policy stability, and rising fiscal deficits have all weakened investor confidence in the stability of the U.S. dollar and the U.S. economy.
The euro has been strong recently, breaking through $1.20 for the first time since 2021 on Tuesday, but fell back on Wednesday. ECB officials later expressed concern about the strengthening of the euro, noting that if the euro's appreciation affects the inflation outlook, the central bank may need to consider further easing policy. In addition, the yen is expected to post its strongest monthly gain against the U.S. dollar since April last year, partly due to market speculation about joint Japanese and U.S. intervention in the currency market.
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