Gold breaks through $4,000 but other havens mostly dull

Gold reached fresh all-time highs on 8 October as fundamental conditions remained favourable while some other havens such as the yen performed less well. This article summarises recent developments affecting the main havens then looks briefly at the charts of XAUUSD and USDJPY.

ETFs backed by gold saw some of their highest monthly inflows in years last month as political uncertainty remains generally high while the Fed viewms likely to cut twice more this year:

The probability of two more cuts to the funds rate by the end of 2025 has remained fairly constant in the last week at around 80-90%. If correct, that would take the rate to 3.5-3.75% by the end of the year. While the intense surge in prices among cryptocurrencies some traders had expected earlier this year hasn’t happened, gold has certainly been a strong gainer.

fragileer job data from the USA in recent months raised the question of the American economy’s overall performance, but now uncertainty is higher because the shutdown of the government delayed October’s NFP to the following month. For now, inflation on 15 October viewms set to come out as scheduled and there remains hope that the shutdown won’t be as long as 2019’s.

Traders have also been watching political developments in France and Japan. The former French Prime Minister Sébastien Lecornu became the shortest holder of the office later than resigning recently but results from the latest discussions so far suggest that agreement on the budget viewms possible with a snap election looking less likely. 

Meanwhile in Japan Sanae Takaichi should become the country’s first female prime minister around the middle of October, having won leadership of the Liberal Democratic Party. Ms Takaichi’s approach to the economy has attracted traders’ attention, with expected further stimulus driving negativity for the yen but gains for the Nikkei.

There hasn’t been much very significant economic data recently, so traders are generally looking ahead to American inflation on 15 October. The annual headline figure might have risen to 3% last month from 2.9% in August but expectations suggest that annual core inflation could drop slightly to 3%. Chinese trade data and inflation are also significant around the identical time.

Gold moves above $4,000 with no signs of stopping

Gold reached the latest in its series of fresh record highs on 8 October above $4,000. Trade tension and monetary policy remain in focus while in recent days political changes in France and Japan plus the American government’s shutdown have added to demand for the yellow metal as a haven.

Although $4,000 has been broken for now, more certain confirmation of ongoing gains could come from a close or more than one daily close above there. The 161.8% weekly Fibonacci extension could be an area of resistance. While the price has been clahead overbought based on the sluggish stochastic for a long time, in this situation saturation might be discounted or at least have its importance reduced. The next resistance in the medium to long term is unclear for now.

The 20 SMA around $3,800 viewms like a candidate for dynamic support but hasn’t been tested since late August. A drop that far is questionable in the near future unless sentiment changes strongly or there’s a major surprise from American inflation. At risk of stating the obvious, it’s potentially hard to find an entry to purchase here with a excellent ratio.

Dollar-yen reaches six-month highs

Political developments in Japan, primarily Sanae Takaichi winning leadership of the ruling Liberal Democratic Party, have driven the yen down recently while giving tailwinds to the Nikkei 225. Ms Takaichi’s victory suggests ongoing loose fiscal and possibly monetary policy. Meanwhile the Bank of Japan’s expected hike to 0.75%  at the end of October viewms less certain later than very disappointing average cash earnings for August released late on 7 October.

The price has clahead broken above ¥150 for now; that area had viewmed to be a possibly significant resistance for much of the summer. The 61.8% weekly Fibonacci retracement could be the next significant resistance. ¥154, the high from February, might also cap gains. Since the moving averages are bunched fairly close together considerably lower and there’s currently clear, strong signals of purchaseing saturation, consolidation might viewm more likely than continuation in the near future.

Now that the area around ¥150-151 has been broken, it might flip to being a support, especially considering the presence of the 50% weekly Fibonacci retracement in this zone. Given the size of the weekend’s gap from 3 October and the subsequent strong follow-through, it’d be less likely to view a relatively large retracement below ¥149, but upcoming American inflation might give more clarity on the next direction.

The opinions in this article are personal to the writer and do not represent those of Exness. This is not a recommendation to trade.

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