The price of Gold (XAU/USD) has seen a decline after hitting record highs, influenced by the strengthening of the US Dollar and projections from the Federal Reserve that suggest only limited interest rate cuts ahead. Meanwhile, the Nasdaq is feeling pressure due to trade policy uncertainties and recession fears, with major tech stocks like Apple and Microsoft undergoing corrections. Market volatility is expected to remain elevated amidst speculations regarding Fed policies and the global economic outlook.
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Gold prices (XAU/USD) fell during European trading, reaching $3,021 after previously hitting an all-time high of $3,057. Despite a recovery from a three-day low observed at the beginning of Friday’s trading session, prices are still on a negative trend for two consecutive days, currently positioned slightly above $3,030.
The US Dollar (USD) remains strong following indications from the Federal Reserve (The Fed) that it will only implement two rate cuts of 25 basis points by the end of the year, leading investors to engage in profit-taking activities. However, speculations surrounding potential faster monetary easing could cause the USD to weaken and support gold prices, despite uncertainties in trade and geopolitical risks potentially propelling the commodity’s prices.
DẦU
Oil prices dropped to $67.86 during the European trading session after a sharp rise in the previous session, buoyed by new sanctions targeting independent Chinese refiners related to Iran. Profit-taking activities have burdened today’s Oil price movements. The strict sanctions imposed by the US on Iranian oil exports might result in a decline in global oil supply, escalating tensions within the oil market, potentially driving prices higher.
On another note, production cuts announced by OPEC+ could also push oil prices up. Although these cuts aim to counterbalance overproduction, concerns that some OPEC+ members may not adhere to their production targets could limit their effectiveness, ultimately supporting higher oil prices in the short term.
EURUSD
The EURUSD pair continues to face pressure during this afternoon’s European trading, following a warning from ECB President Christine Lagarde that trade wars led by US President Donald Trump have the potential to slow down Eurozone economic growth. This concern adds further pressure on the Euro amidst global uncertainties.
Meanwhile, the Federal Reserve (The Fed) has maintained stable interest rates while holding onto projections of two rate cuts in 2025. The Fed emphasized that Trump’s trade policies could burden US economic growth while accelerating inflationary pressures, potentially influencing future monetary policy directions.
GBPUSD
GBPUSD has weakened close to the 1.2920 level against the US Dollar after reaffirmation from the Federal Reserve (The Fed) that it is not in a rush to lower interest rates, strengthening the Dollar amid economic uncertainties stemming from President Donald Trump’s new policies. On the other hand, Bank of England (BoE) Governor Andrew Bailey indicated that UK interest rates may experience gradual reductions, asserting that monetary loosening will be conducted carefully, relying on economic data.
In the short term, GBPUSD remains at risk of further pressure if The Fed maintains a tighter policy longer than expected, but if the UK economy shows resilience and the BoE remains cautious in rate cuts, the Pound could find some support.
USDJPY
USDJPY has appreciated during the European session as the Japanese Yen (JPY) remains under pressure early in the session after data revealed a slowdown in Japan’s consumer inflation for February. Conversely, the US Dollar (USD) is supported by The Fed’s forecast of only two interest rate cuts of 25 basis points (bp) by the year’s end, keeping USDJPY above 149.00.
Nonetheless, expectations of robust wage growth in Japan could push inflation higher, providing room for the Bank of Japan (BoJ) to raise interest rates by 2025. This policy divergence with The Fed may limit USD’s gains and support JPY in the long run.
NASDAQ
The Nasdaq faced pressure on Friday due to uncertainties surrounding trade policies and recession fears, particularly following additional tariff threats against the tech sector. Major stocks like Apple, Microsoft, and Nvidia faced sell-offs after a prolonged rally, prompting corrections in their valuations.
Moreover, speculation that the Federal Reserve (The Fed) might delay interest rate cuts has weighed on the Nasdaq. Higher interest rates diminish the appeal of tech stocks reliant on low borrowing costs. With a fragile economic outlook, Nasdaq volatility is anticipated to remain high in the near future.
