Gold encounters new supply and retreats toward the post NFP low.
On the opening day of a new week, the price of gold (XAUUSD) meets with new supply. And retreats towards a two-week low that was reached in the wake of Friday’s positive US monthly employment data. The widely recognized Nonfarm Payrolls (NFP) report provided additional evidence of the US labor market’s continued resilience. And gave the Federal Reserve (Fed) capacity to sustain greater rates over time. Moreover, investors were compelled to keep reducing their expectations for a more aggressive policy. Easing due to the recent hawkish comments made by Fed officials. This is therefore expected to continue driving flows away from the non-yielding yellow metal. And to promote higher US Treasury bond yields.
The XAUUSD is still being affected by the decreasing likelihood of more aggressive easing by the Fed.
The markets are still factoring in a higher likelihood of the Fed cutting interest rates for the first time at its policy meeting in March as well as a total of five rate cuts totaling 25 basis points (bps) by 2024. This may provide some support for the price of gold and keep supporters of the US dollar (USD) on the defensive.
Aside from this, the safe-haven precious metal should benefit from a generally lower risk tone. .. Before making new directional bets, investors may alternatively choose to sit it out and wait for the US consumer inflation data on Thursday. Without any pertinent US economic data, traders will be looking to Atlanta Fed President Raphael Bostic’s scheduled address on Monday for guidance.
Daily Market Movers: Uncertainty around an early Fed rate cut is pressuring the price of gold.
The Federal Reserve’s policy stance is expected to change soon, but investors are lowering their expectations further after the publication of Friday’s strong December monthly US jobs data.
In contrast to expectations, the US economy created 216K new jobs last week. But the unemployment rate remained stable at 3.7%, below consensus projections that it would rise to 3.8%.
Including in US Factory Orders declined 3.4% in October (revised slightly up from -3.6%). But then surprised to the upside in November, growing by 2.6% beyond expectations.
Separately, the US services sector, which makes up more than two thirds of the economy, collapsed last month. According to a poll conducted by the Institute for Supply Management (ISM).
The employment sub-component fell to 43.3 in December. The lowest level since July 2020, while the ISM’s Non-Manufacturing Index fell to 50.6 in December, the lowest score since May.
According to Dallas Fed President Lorie Logan, there’s a chance that progress will be reversed by inflation if the US central bank does not keep financial conditions. Sufficiently tight. Israel responded to the Tuesday death of Saleh al-Arouri, the senior leader of Hamas. With what it described as a “preliminary response.”
A deal reached by Senate Majority Leader Chuck Schumer and House Speaker Mike Johnson on topline spending levels ends. The impasse and prevents a government shutdown, but the markets show no reaction to it.
