GOLD: Gold’s Love for Rate Cuts Sees Prices Rise.
- Gold prices rose to the highest levels since early December overnight.
- Back in December following the FED’s rate cut, uncertainty reigned in terms of the potential pathway for rate cuts as FED officials seemingly watered down the possibility for 2025.
- This week’s softer US inflation has stoked the rate cut fire again with bond yields gapping lower and taking the USD with it, giving a boost to gold which rose to a high yesterday of US$2,724.76 before closing at $2,714.31.
- Holdings in ETF’s backed by physical bullion have seen a resurgence in demand in January with total investment value up 0.5% YTD.
- Key Central Bank’s resumed purchases of gold late last year possibly on an interest rate view and expectations from traders is that this could continue.
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AUSSIE 10-YEAR TECHS: (H5) Short-Term Uptrend
- RES 3: 96.975 - High Mar 14
- RES 2: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- PRICE: 95.675 @ 15:55 GMT Dec 17
- SUP 1: 95.625 - Low Dec 15
- SUP 2: 95.567 - 50.0% Fib Retracement Nov-Dec Upleg
- SUP 3: 95.275 - Low Nov 14
Aussie 10-yr futures have pulled back from their most recent highs. Despite the pullback, a short-term bull cycle remains in play. A continuation higher would refocus attention on resistance at the 96.207 level, a Fibonacci retracement. On the downside, a stronger bearish reversal would instead expose 95.635 initially, ahead of support at 95.567, Fibonacci retracement points.
NEW ZEALAND: Current Account Position Continues Gradual Improvement
NZ’s Q3 current account deficit narrowed to $6202mn from $7094, the lowest in over three years. This brought the ratio to GDP down to 6.4%, better than expected and consistent with the RBNZ’s Q1 2025 forecast of 6%. There has now been an improvement of 2.8pp since the 9.2% peak in Q4 2022. With domestic demand weak, growth in imports of goods and services ran below exports. Q3 GDP released Thursday is forecast to fall again.
- Imports of goods and services rose 0.2% y/y down from 1.2% in Q2. The weakness is being driven by merchandise which fell 4.0% q/q and 2.4% y/y, its sixth consecutive annual decline. Given the data are nominal lower global oil prices would have weighed on import values, but petrol volumes were higher. There were also lower car imports. Services were stronger rising 1.5% q/q and 7% y/y up from 5.4% y/y.
- Exports rose 2.8% y/y up from 2.0% with the 0.5% q/q increase driven by services. They rose 3.0% q/q but fell 0.7% y/y due to negative base effects. Merchandise shipments fell 0.6% q/q but were 4.4% y/y higher.
- The primary income deficit narrowed $120mn to $3.5bn as NZ investors earned more from overseas than foreign investors in NZ.
NZ current account % GDP YTD
Source: MNI - Market News/Refinitiv
AUSSIE 3-YEAR TECHS: (H5) Bull Cycle Remains In Play
- RES 3: 96.380 - High Mar 21 2023
- RES 2: 97.190 - High May 5 2023
- RES 1: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
- PRICE: 96.180 @ 15:55 GMT Dec 17
- SUP 1: 95.760 - Low 13 Nov 24
- SUP 2: 95.750 - Low 27 Nov ‘23
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures remain in a short-term uptrend following the reversal from the pullback low at 95.760, the Nov 13 low. A continuation higher would reinforce the current bullish condition and signal scope for an extension. The next key resistance is at 96.730, the Sep 17 high. For bears, a stronger reversal lower would refocus attention on 95.760 where a break would instead highlight a stronger bearish set-up.
