XAU/USD Current price: $2,033.05 The United States' Gross Domestic Product was downwardly revised to 3.2% in Q4. Investors await an update on US inflation before taking directional compromises. XAU/USD is technically neutral with bulls ready to jump in. Tepid United States (US) macroeconomic data helped XAU/USD bounce from an intraday low of $2,024.38. The bright metal trimmed intraday losses and turned positive for the day, currently changing hands at around $2,033 a troy ounce. The country released the second estimate of the Q4 Gross Domestic Product (GDP), which showed the economy grew at an annualized pace of 3.2% in the last three months of 2023, slightly below the 3.3% previously estimated.  Additionally,   the January Goods Trade Balance posted a deficit of $90.1 billion, worse than the $-89.1  billion posted in December. Meanwhile, stock markets spent the day on the back foot amid a retracement in the tech sector. At the time being, Wall Street trimmed most of its early losses, but the three main indexes remain in the red. The focus shifts now to the US Core Personal Consumption Expenditures (PCE) Price Index. The Federal Reserve's (Fed) favourite inflation gauge will be out on Thursday and is expected to show easing price pressures in January. That would contradict the hotter-than-anticipated January Consumer Price Index (CPI) released a couple of weeks ago and put markets in risk-on mode. XAU/USD short-term technical outlook From a technical point of view, XAU/USD maintains the neutral-to-bullish stance. In the daily chart, the pair met buyers around a flat 20 Simple Moving Average (SMA) which keeps developing well above the longer ones. As Gold trades little changed for a third consecutive day, technical indicators extend their consolidative phase around their midlines, failing to provide directional clues. The near-term picture is also neutral. Technical indicators in the 4-hour chart have lost their directional momentum within neutral levels, although XAU/USD stands just above a bullish 20 SMA. Finally, the longer moving averages remain directionless below the shorter one, reinforcing the idea of a limited downward potential. Support levels: 2,027.00 2,019.60 2,011.40 Resistance levels: 2,041.40 2,056.10 2,065.60

EUR/USD came under bearish pressure and declined toward 1.0800 early Wednesday. Cautious market mood could make it difficult for the pair to rebound. US economic calendar will feature second estimate of Q4 GDP growth. After failing to clear 1.0860 resistance on Tuesday, EUR/USD turned south and declined toward 1.0800 early Wednesday. The pair's technical outlook points to a bearish tilt in the near term. Market participants will pay close attention to the risk perception and the revision to the US growth data. The broad-based US Dollar (USD) weakness helped EUR/USD push higher in the first half of the day on Tuesday. The mixed action in Wall Street's main indexes and the resilience of the US Treasury bond yields, however, helped the currency hold its ground and didn't allow the pair to gather bullish momentum. The risk-averse market atmosphere, as reflected by retreating US stock index futures, supports the USD midweek and weighs on EUR/USD.

Markets A batch of US data turned out mixed yesterday. Strong core capital good shipments (investment proxy) compensated for negatively distorted durable goods orders (Boeing). House prices rose in line with forecasts but consumer confidence unexpectedly retreated on a deteriorating current and six month ahead assessment on the economy and jobs. Second tier business sentiment indicators were unable to settle the debate either, especially with a more important one (manufacturing ISM) scheduled later for release on Friday. US yields whipsawed with net daily changes of -2.6 bps (2-y) to +3.2 bps (30-y) eventually. The $42bn 7-y auction went smoother than Monday's 5-y but didn't leave a stamp. German Bunds underperformed. They erased intraday gains to push yields 0.4 to 3.3 bps higher to make the curve slightly less inverse. Equities along with major FX didn't choose a strong direction. The EuroStoxx50 hit new multiyear highs but Wall Street finished mixed. EUR/USD ended the day slightly weaker at 1.0844, DXY an inch higher. Above-consensus Japanese CPI helped JPY close to nothing. USD/JPY (150.51) closed well above the daily lows. Drowned Under. The central bank of New Zealand softened its previous threat to lift rates even further (see below), turning the Kiwi dollar into this morning's biggest underperformer. The Aussie dollar trades on the backfoot as well following (incomplete) monthly CPI figures (January 3.4% vs 3.6% expected). USD takes a lead during mild risk-off. US cash yields ease less than 2 bps and German yields are ready for a lower open as well. Belgium kicks off the CPI bonanza today, be it with a national calculation (instead of the harmonized one). Most of the EU member states (harmonized) CPI readings are due tomorrow (ahead of the euro area figure on Friday), however. In absence of other market-impacting data, it means we may be looking at a quiet trading session with moves being mainly technically inspired. Fed's Williams (New York), Collins (Boston) and Bostic (Atlanta) hit the wires today. We expect them to repeat Waller's "what's the rush" (for cutting rates) in some form or another. The power of repetition brought US money markets more or less in line with the December dot plot (three cuts this year) meanwhile. Core bond yields in any case enjoy a solid floor beneath them. The dollar's recent correction looks ready for a reversal. Spillovers from Asian equity markets to Europe could help the greenback in the process. News and views The Reserve Bank of New Zealand (RBNZ) kept its policy rate unchanged at 5.5% this morning. Interest rates need to remain at a restrictive level for a sustained period of time. Annual headline CPI is expected to return to the 1%- 3% target band by Q4 this year and to the 2%-midpoint later in 2025. Risks to the inflation outlook are more balanced than at the time of the November meeting/update. Restrictive monetary policy and lower global growth have contributed to aggregate demand slowing to better match the supply capacity of the NZ economy. High population growth (immigration) still supports aggregate spending and also helps easing capacity constraints in the labour market. Updated forecasts show policy rates (at least) level until Q1 2025 with the probability of an additional hike being slightly lower (5.6% policy rate peak compared to 5.7% in November). OCR projections otherwise barely changed (unaltered 4.9% in Q4 2025; 3.5% from 3.6% in Q4 2026). Annual inflation is expected at 3.8% for the March FY (from 4.3%), 2.6% for FY 2025 (from 2.4%) and 2% for FY 2026 (unchanged). The new growth path is 0.3%-1.2%-2.8% from 1.2%-1.4%-2.8%. NZD swap rates plunge 16 bps (30-yr) to 23 bps (2-yr) this morning as markets now rule out an additional rate hike. The kiwi dollar drops from NZD/USD 0.6170 to 0.6110. Bank of England deputy governor Ramsden, who oversees financial markets, said that the UK central bank may continue running down its QE portfolio even after hitting the "preferred minimum range of reserves" which it estimates in the range of £335bn to £495bn. The BoE's asset portfolio declined from a £895bn peak to currently £735bn with Ramsden suggesting that the BoE can wind it down completely should it be necessary. This view contrasts with for example the Fed which wants to maintain a structural bond portfolio to back an ample level of reserves. Download The Full Sunrise Market Commentary

Gold price finds buyers to once again retest two-week highs of $2,041 early Wednesday. US Dollar extends rebound but weak Treasury bond yields could cap the upside. The 4H technical setup appears constructive, as Gold price awaits US data. Gold price is duplicating the price action seen during Tuesday's Asian trading, as bulls attempt another comeback early Wednesday. The US Dollar (USD) is building on the previous recovery, despite a minor pullback in the US Treasury bond yields, as markets turn tentative ahead of a fresh batch of US GDP and PCE data due later in the day. Gold continues to find dip-demand Markets are seemingly quiet, digesting the Reserve Bank of New Zealand's (RBNZ) dovish hold decision on the interest rate. Traders take profits off the table on their recent US Dollar short positions, awaiting a fresh directional impetus on the upcoming US economic data releases. The US Gross Domestic Product (GDP) second estimate for the fourth quarter and the PCE deflator could help the markets reprice the Federal Reserve (Fed) interest rate cut bets for this year. Markets are currently pricing in about an 80% chance of a no rate cut by the Fed in the May meeting while the probability that the Fed will begin lowering rates in June stands at 60%, down from about 70% seen last week. The sentiment surrounding the expectations of a Fed policy pivot will continue to drive the value of the US Dollar, as well as, the Gold price in the sessions ahead. Gold price has been struggling to resist above the $2,033 level so far this week, having hit a two-week high of $2,041 last Friday. The uptrend in the US Treasury bond yields, in the wake of hawkish commentary from Fed officials, is keeping Gold price upside restricted. Fed Governor Michelle Bowman said on Tuesday that slower-than-expected progress on inflation has left her cautious about monetary policy stance. Earlier in the day, Kansas City Fed President Jeffrey Schmid, a new hawk, noted that there is "no need to preemptively adjust the stance of policy." "Fed should be patient, wait for convincing evidence that inflation fight has been won," Schmid added. Gold price technical analysis: Four-hour chart Following an upside breakout from the pennant on Tuesday, Gold price extended higher but ran into offers just below the two-week high of $2,041. At the moment, Gold price is struggling around the 21-Simple Moving Average (SMA) at $2,033. Acceptance above that level is needed on a four-hour candlestick closing basis to revive the uptrend. The 50-Simple Moving Average (SMA) is on the verge of cutting the 200-SMA for the upside. If that happens, a Golden Cross formation will be confirmed, opening doors for a fresh upsurge.   The Relative Strength Index (RSI) is holding well above the midline, backing the bullish potential. The immediate resistance for Gold price aligns at the two-week high of $2,041. Further up, the $2,050 psychological barrier will challenge the bearish commitments, as Gold buyers target the static resistance at around $2,065. On the other side, a failure to resist above the 21-SMA at $2,033, Gold price could see a fresh downswing toward the immediate demand area around near $2,026, which is the confluence zone of the 50- and 200-SMAs. A breach of the latter could trigger a fresh drop toward the 100-SMA at $2,022. The last line of defense for Gold buyers is Friday's low of $2,016.

Markets On Tuesday, U.S. stocks ended the day with little change, as investors remain grounded ahead of critical economic data, including the Federal Reserve preferred inflation gauge, which is expected to shed some light on the timing of the first Fed cut. With the corporate earnings season nearing the end of the runway, investors shifted their focus back to economic indicators and the anticipated trajectory of U.S. interest rates. However, in a data-dependent world, when have we never focused on economic data of one type or another? Traders are keenly aware that the recent components of the Consumer Price Index (CPI) and Producer Price Index (PPI) have influenced the Personal Consumption Expenditures (PCE), and it is unlikely that they will receive an inflation print below the Federal Reserve's target rate. This contrasts with the sub-2% prints observed over the past six months. The January CPI and PPI data have shown unexpectedly high readings, hawkishly altering the market landscape. The rates market has shifted from an anticipated six rate cuts by the Federal Reserve in 2024 to just three, indicating that investors might find themselves on the wrong end of the stick if a top-side beat is big enough to threaten the 3 cut narrative. Treasury yields are again on the rise, driven by a surge in corporate and government issuance, adding pressure to an already fragile market. This yield increase coincides with a notable uptick in U.S. inflation figures and robust job market readings. Simultaneously, the Federal Reserve has been pushing back against expectations of rapid rate cuts, contributing to the upward trajectory of yields. This development is often viewed as a negative signal for stocks, as they now face competition from bonds for investor favours. However, the traditional correlation between rising yields and falling stock prices is changing in the A.I. frenzy, albeit temporarily. Still, more investors are beginning to acknowledge that companies like Nvidia, which have posted staggering increases in sales and profits, should not be dismissed as bubbles despite concerns from bearish analysts. The critical question is whether these high-growth companies can sustain their targets over the medium to long term. While their recent performance has been impressive, smart money will always remain cautious about the sustainability of such rapid expansion.  All in all, Wall Street shimmied within narrow trading ranges and the  limited movements are unlikely to provide significant direction for Asian markets as traders are happy to twiddle thumbs ahead of a U.S. data barrage Cryptocurrencies Alongside the surge in tech stocks, cryptocurrency prices have also increased dramatically. Bitcoin, for instance, surpassed the $57,000 mark before slightly retreating below it, marking a gain of approximately one-third since the beginning of the year. The introduction of new exchange-traded funds (ETFs) that hold bitcoin has simplified investing in the cryptocurrency but has not necessarily reduced the risk and volatility. Among the nine ETFs, BlackRock's iShares Bitcoin Trust (IBIT) has emerged as the focal point, drawing significant attention in early days -market activities. Blackrock's profits will be in for BTC windfall with the coins they bought in the $30,000 being sold to the new wave of investors + $50,000 Forex markets  The dollar remained stable, while the yen experienced only marginal gains despite unexpectedly resilient Japanese inflation. However, F.X. markets are focused on the RNBZ, which is sometimes viewed as a harbinger of G-10 policy, although its migration swell is causing inflation problems.  Net immigration alleviates the constraints on the labour market's supply by increasing the available workforce. However, it also tends to have an inflationary effect on rents and house prices. Oil markets Oil prices surged more than 1% in response to media reports suggesting that the Organization of the Petroleum Exporting Countries (OPEC) and Russia-led producers are contemplating extending the current output cuts of 2.2 million barrels per day (bpd) until the end of the year. This move aims to prevent oil inventories from experiencing significant build-ups. Tuesday's increase in oil prices was further bolstered by an announcement from Russian officials regarding a six-month ban on gasoline exports starting March 1. This ban aims to curb price hikes and address fuel shortages in the domestic market. The decision may have been influenced by unplanned refinery outages in Russia, possibly exacerbated by escalating drone attacks from the Ukrainian military.

Economists expect inflation to have fallen in February in the Eurozone.  Low expectations may result in a hotter outcome, especially in underlying inflation. A "sticky" core inflation figure of 3% would disappoint investors expecting rate cuts. Is inflation under control or about to reaccelerate? That is the dilemma for US policymakers, but it is not lost on Europe – despite recession fears. Preliminary figures for February will shed light on the matter and probably rock the Euro. Here is the preview of the Harmonized Index of Consumer Prices (HICP) report for the Eurozone in February, due on Friday at 10:00 GMT. No victory lap just yet This is (almost) what victory should look like: Eurozone HICP. Source: FXStreet Headline inflation fell from a peak of 10.6% in October 2022 to a trough of 2.4% in November 2023, within touching distance of 2%, the goal of the European Central Bank (ECB). Then, it advanced. Is this a "dead-cat bounce," which will be followed by further falls? After hitting 2.8% YoY in January, economists expect the HICP to fall to 2.5% in February, thus resuming its falls. That would result from the recent calm in Oil prices and stability in food costs. However, when stripping out volatile items, the picture is more complex. Sticky services costs Like the US, Europe is struggling with the secondary effects of inflation, reflected in rising wages. Acceleration in pay results in higher services costs. It is the so-called "sticky" part of inflation, as wages do not fall quickly – especially in Europe, where collective bargaining locks in salary raises for many workers. Nevertheless, the economic calendar points to an expected drop in Core HICP from 3.3% to 2.9%. The last time underlying inflation hovered below 3% was in February 2022 – just before Russia invaded Ukraine. However, the sticky nature of wages mentioned earlier could result in a small beat, with 3% or even 3.1%. In such a case, hawks at the ECB would be emboldened to leave interest rates higher for longer. That would also boost the Euro. If Core HICP misses estimates and tumbles to 2.8% or lower, concerns about a recession will grow, and the Euro will fall. Such a scenario is less likely. An as-expected 2.9% outcome would result in a moderate market response, leaving room for the Euro to move according to the headline HICP and other factors. Final Thoughts I expect Core Eurozone HICP to beat estimates due to collective bargaining. If this analysis is correct, the Euro would receive a boost. It is essential to note that early releases from individual countries do not highlight underlying inflation data measured by European standards, so the reading has the potential to provide surprises.