Morning Note: Adobe’s AI Momentum Leads Market Moves with Gold and Fed in Focus

Gold Gains on Fed Bets and US-Iran Tensions

Gold climbed toward $3,370 per ounce on Thursday, driven by renewed safe-haven demand amid rising US-Iran tensions and soft US inflation data. The US ordered embassy staff to leave Baghdad after Iran warned of potential strikes on US bases should nuclear talks fail. Weak consumer inflation reinforced expectations of Federal Reserve rate cuts, adding further support to gold prices.

Markets are now pricing in a 50-basis-point Fed rate cut by year-end, with attention turning to upcoming PPI data for more policy clues ahead of next week’s FOMC meeting. Meanwhile, on the trade front, President Trump announced a breakthrough in the US-China trade dispute, revealing that negotiators had agreed on a framework to revive a fragile truce, including terms related to tariffs.

(Gold Daily Price Chart, Source: Trading View)

From a technical analysis perspective, gold has rebounded from the upper boundary of the descending channel and the support zone between 3,275 and 3,295. It is currently retesting the resistance zone at 3,375 to 3,395. A breakout above this resistance could signal continued bullish momentum, potentially pushing prices toward the 3,420 level. Conversely, if bearish pressure holds this zone and prevents a breakout, it may drive the price lower.

Investors Await U.S. PPI Data

In April, the U.S. Producer Price Index (PPI) rose by 2.4% year-over-year, while the month-over-month figure showed a decline of 0.5%. For May, market expectations suggest a slight easing in the annual rate to 2.3%, alongside a modest monthly increase of 0.1%. This data is set to be released today at 12:30 GMT.

The projected year-over-year deceleration to 2.3% reflects a base effect from higher readings in the prior year, which naturally tempers the annual growth rate. On the monthly front, the anticipated 0.1% rise in May PPI likely stems from stabilizing commodity prices and reduced volatility in energy and trade services after April’s unusually sharp drop. These expectations point to a normalization in producer-level inflation trends as supply chains stabilize and demand finds a more balanced footing.

(U.S Dollar Index Daily Chart, Source: Trading View)

From a technical analysis perspective, the U.S. Dollar Index has been trending lower, as indicated by a series of lower highs and lower lows. Recently, it broke below the support zone between 98.40 and 98.70. If it fails to close back above this zone in the near term, it indicates that bearish momentum has taken control and may potentially drive the index even lower.

Can Adobe's AI Push Drive Q2 Results?

Adobe (ADBE) is scheduled to release its Q2 fiscal 2025 results on June 12. The company forecasts revenue between $5.77 billion and $5.82 billion, with non-GAAP EPS expected to range from $4.95 to $5, reflecting a 10.71% increase. Top-line growth is likely supported by Adobe’s expanding Generative AI (GenAI) offerings and strong partnerships with Amazon, Microsoft, and Alphabet. New additions to its GenAI suite, like Firefly Image Model 3, improved vector and design models, and a new video model have been integrated across key products such as Photoshop, InDesign, and Premiere, enhancing user experience despite GenAI monetization challenges.

(Adobe Daily Price Chart, Source: Trading View)

From a technical analysis perspective, Adobe's stock has been in a bearish trend since February 2024, as shown by a pattern of lower highs and lower lows. Recently, it rebounded from the lower boundary of the descending channel and the support zone between 334 and 345. The price is currently nearing the resistance zone at 435 to 450. A breakout above this level could lead to a move higher, potentially retesting the gap area between 492 and 507. Conversely, if bearish pressure holds this zone, the price may decline again to retest the support area.