Gold Tops $4,250 on Soft US Data - CPT Markets

Market Wrap-up: Gold Rallies While Oil Falls on Middle East TalksMarkets traded in relatively narrow ranges during the previous session as investor attention remained focused on the Middle East, where the United States, Iran and Oman are discussing a temporary agreement. The negotiations raised expectations of improved energy flows from the region, easing immediate supply concerns.

Meanwhile, US officials continued to express confidence that a broader agreement with Iran is drawing closer, although investors remained cautious about the durability of any long-term peace arrangement in the region.

WTI crude remained under pressure, falling around 1.5% to below $75 per barrel. However, downside momentum could be limited after reports that Yemen's Iran-backed Houthi forces claimed responsibility for a missile attack on a Saudi oil tanker near Yanbu, a key crude export gateway on the Red Sea.

Gold was the standout performer of the session, surging 4.3% to above $4,250 per ounce. The rally was supported by a weaker US dollar and lower US Treasury yields, which strengthened demand for non-yielding safe-haven assets.

On the macro front, the latest ADP Nonfarm Employment report showed that private payrolls increased by only 44,000 in July, well below economists' expectations of 70,000, reinforcing signs of a cooling US labor market.

Meanwhile, the ISM Services PMI edged up to 54.1 in July from 54.0 previously. Although the reading pointed to continued expansion in the services sector, it came in below the market expectation of 54.5, suggesting that growth remains modest.

During the session, Fed Governor Lisa Cook reiterated her support for keeping interest rates unchanged at the latest FOMC meeting while awaiting additional economic data. At the same time, she warned that further rate hikes could still be warranted if inflation fails to moderate.

Looking ahead for today, traders will closely monitor US Initial Jobless Claims and remarks from FOMC member Musalem for further guidance on the outlook for the US economy and monetary policy.

XAU/USD: Weak Dollar Fuels Gold Breakout 

Key takeaway:

Gold surged during the August 5 session as a weaker US dollar and declining US Treasury yields boosted demand for the precious metal. Investors also continued to monitor developments in the Middle East to assess the implications for inflation expectations and the Federal Reserve's interest rate outlook.

The US dollar is hovering near its lowest level in three months, making dollar-denominated gold more attractive for overseas buyers.

Meanwhile, the benchmark US 10-year Treasury yield remained near its lowest level in around one week, providing additional support for gold prices.

Technical Outlook:

Daily Bias: Bearish

Support: 4,166

Resistance: 4,300

Oil: WTI Slides Below $75 on Hormuz Deal Hopes 

Key takeaway:

WTI crude eased after Iran and Oman reached a temporary agreement on shipping routes through the Strait of Hormuz, improving expectations for regional energy flows. However, the market remains cautious given the temporary nature of the arrangement and its uncertain long-term sustainability.

At the same time, US officials continued to express confidence that a broader agreement with Iran is approaching, further weighing on geopolitical risk premiums.

However, downside pressure may be limited after reports that Yemen's Iran-backed Houthi forces launched a missile attack on a Saudi oil tanker.

Technical Outlook:

Daily Bias: Bearish

Support: 72.00

Resistance: 76.09

DXY: US Dollar Weakens After Soft ADP Jobs Report 

Key takeaway:

The US Dollar Index weakened after the August 5 ADP employment report showed that private payrolls increased by only 44,000 in July, significantly below economists' expectations of 70,000, reinforcing evidence of a slowing US labor market.

Meanwhile, the latest ISM Services PMI edged up to 54.1 in July from 54.0 previously, but remained below the market forecast of 54.5, indicating that services activity continued to expand at a moderate pace.

Inflation pressures remained elevated as the ISM Prices Paid Index rose to 70.3 from 67.7, while labor market conditions softened with the Employment Index falling to 47.4 from 51.2.

Technical Outlook:

Daily Bias: Bearish

Support: 99.41

Resistance: 100.00

EUR/USD: Euro Advances on Weak US Data 

Key takeaway:

The euro strengthened against the US dollar as easing tensions in the Middle East combined with weaker-than-expected US economic data to weigh on the greenback.

Additional support came from encouraging Eurozone economic data. The final HCOB Eurozone Services PMI was revised higher to 51.7 from 51.6 previously.

The data confirmed that the services sector returned to expansion after three consecutive months of contraction, reflecting a notable improvement from June's reading of 49.4.

Technical Outlook:

Daily Bias: Bullish

Support: 1.15000

Resistance: 1.15591

USD/JPY: Japanese Yen Holds Firm as BoJ Normalisation Stays in Focus 

Key takeaway:

The Japanese yen traded broadly sideways during the previous session despite broad-based weakness in the US dollar.

Investors continued to assess the minutes from the BoJ's June policy meeting, which showed policymakers debating the need for further interest rate increases to address inflation risks.

BoJ Governor Kazuo Ueda has also repeatedly stated that the central bank remains prepared to continue normalising monetary policy if economic conditions allow, providing an underlying source of support for the yen.

Technical Outlook:

Daily Bias: Bearish

Support: 155.54

Resistance: 158.00

Cross-asset price action was driven primarily by weaker US economic data and improving sentiment surrounding Middle East negotiations.

Softer ADP employment figures pressured the US dollar and Treasury yields, lifting gold sharply, while expectations of improved energy flows from the region weighed on oil prices despite renewed geopolitical risks from the Houthi attack on a Saudi oil tanker.

The euro benefited from both weaker US data and firmer Eurozone services activity, while the Japanese yen remained range-bound as markets balanced dollar weakness against the BoJ's gradual policy normalisation outlook.

Attention now shifts to US Initial Jobless Claims and remarks from FOMC member Musalem, which could provide fresh direction for Federal Reserve expectations and broader market positioning.

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