Concerning the investment opportunities in foreign exchange and gold in 2024, the following ALPHABT analysis is based on artificial intelligence and the latest market data:
Foreign exchange market analysis
Volatility decreases in 2023: In 2023, the volatility of the foreign exchange market continues to decrease. The JPMorgan Global FX Volatility Index is at its lowest level since February 2022. This decline has been attributed to a variety of factors, such as the resilience of the U.S. economy and market participants canceling bets on a U.S. recession in favor of strong consensus pricing for a U.S. "soft landing" scenario. In addition, G10 and emerging market countries are priced in "adjustment interest rate cuts" in 2024, while the Federal Reserve gradually transitions from implementing tightening policies to a more neutral stance. The People's Bank of China has aggressively pursued a predictable exchange rate range policy, resulting in lower yuan volatility.
The Bank of Japan’s position: Market expectations are that the Bank of Japan may exit its negative interest rate policy in 2024. However, the central bank continued to stick to its dovish stance and gave no clear indication on whether this would happen. Nonetheless, Japan's economic outlook looks promising in 2024, with strong growth and sustainable inflation expected.
Federal Reserve Policy: The Federal Reserve kept interest rates unchanged for the third consecutive meeting and is expected to cut interest rates by 75 basis points in 2024. Economists predict that the Federal Reserve will cut interest rates for the first time in June 2024, with cumulative interest rate cuts of 150 basis points in 2024 and 2025. Nonetheless, the U.S. dollar fell sharply after the meeting, but this does not necessarily mean that the U.S. dollar will definitely fall in the future.
Gold market analysis
Gold Price Trend: After rising 14% in 2023, its best performance in three years, gold prices strengthened on the first trading day of 2024. Despite the rise in the dollar and U.S. Treasury yields, gold prices are gaining new demand and are on track to break above $2,100 an ounce_.
Global geopolitical tensions: Investors remain vigilant at the beginning of the new year due to lingering geopolitical risks in the Middle East, supporting the popularity of gold, a traditional safe-haven asset.
Technical Analysis: Gold prices face resistance at $2,090 per ounce. If gold prices close above $2,090 per ounce, it could challenge the $2,100 per ounce barrier. If the uptrend continues, the next target for gold buyers is expected to be the all-time high of $2,144 an ounce. The 14-day Relative Strength Index (RSI) points to the possibility of more gains ahead. Additionally, the 100-day simple moving average (SMA) is on the verge of cutting into the 200-day SMA from below, signaling an upcoming bullish crossover, reinforcing the bullish outlook.
Economic Uncertainty and Central Banks: In 2024, as several major economies will hold general elections, geopolitical tensions intensify globally, and central banks continue to purchase gold, these factors may Gives gold an extra boost. There is still great uncertainty about whether the Federal Reserve can guide the U.S. economy to a safe landing with interest rates above 5%, and the possibility of a global economic recession remains high. This uncertainty may prompt investors to keep effective hedging instruments such as gold in their portfolios.
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