The ISM Manufacturing Prices Paid index in the United States was 64.8 for July, which is lower than the expected 70. This number indicates changes in manufacturing prices and factors affecting pricing in the industry. In the currency markets, EUR/USD has risen above 1.1550 due to weaker US employment and manufacturing data. At the same time, GBP/USD has regained strength, trading above 1.3250, also influenced by the same reports that hinted at a weaker dollar.

Gold Reaches New Highs

Gold hit a weekly high of about $3,350, benefiting from falling US Treasury bond yields. This movement reflects changing expectations about the Federal Reserve’s future rate decisions, prompted by disappointing job numbers. In the cryptocurrency space, Bitcoin and other coins are facing difficulties after a strong July. Bitcoin dropped below $115,000 as traders looked for support levels amid rising market liquidations and price changes. With recent signs of a slowing US economy, we think the outlook for many assets has shifted. The ISM data showed a decline in prices paid by manufacturers to 64.8, combined with weaker employment numbers, implying that the Federal Reserve’s recent rate hikes are starting to have an impact. We may need to prepare for a period of ongoing US dollar weakness. For currency markets, we expect further growth in EUR/USD and GBP/USD. Traders might consider buying call options on the Euro, aiming for a move towards 1.1700 in the upcoming weeks. Historically, the dollar’s rapid decline in late 2023 illustrates how quickly market sentiment can change once there’s a belief that the Fed has stopped hiking rates.

Bullish Outlook For Gold

The outlook for gold is very positive. It has broken through key resistance to reach $3,350, primarily driven by declining Treasury yields. We anticipate this trend will continue. We should look to add to long gold futures positions, as markets are beginning to price in a good chance of a rate cut before the end of 2025. In contrast, the cryptocurrency market now needs a more cautious approach. Bitcoin’s inability to maintain $115,000 indicates significant profit-taking after the July rally, which was mainly fueled by speculation regarding new institutional products. The high liquidation volume, over $400 million in just 48 hours, suggests we should wait for a solid support base to form before starting new long trades. Create your live VT Markets account and start trading now.

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